It will become the "world's leading managed infrastructure services provider" with over 4,600 customers in 115 countries, including more than 75% of the Fortune 100. In this March 18, 2019, file photo, the logo for IBM appears above a trading post on the floor of the New York Stock Exchange. See you at the top! IBM’s services business has been struggling, as many of its clients delayed purchases of information technology or software upgrades to focus on short-term stability and cash preservation to survive the pandemic. “Today is a landmark day for our company,” Krishna said on a call Thursday. IBM plans to spin off its $19 billion managed-infrastructure services business, while zeroing in the rest of the company on hybrid cloud software and services.. The 109-year-old tech company said Thursday, Oct. 8, 2020, it is spinning off its managed infrastructure services unit into a new public company, temporarily named NewCo. IBM also announced preliminary third-quarter results Thursday. Instead of focusing on aggressive growth like the new IBM, NewCo will mainly focus on "operational efficiency and cash flow generation" -- which suggests it will prioritize cost-cutting measures, buybacks, and dividends over big investments and acquisitions. Poughkeepsie Journal. 2 behind Accenture. The separation is expected to be achieved as a tax-free spin-off to IBM shareholders, and completed by the end of 2021. The new company will manage and modernize corporate clients’ infrastructures, a $500 billion market opportunity, using artificial intelligence and automation, according to IBM. The transaction is expected to close by the end of 2021. IBM became a Dividend Aristocrat of the S&P 500 earlier this year after raising its dividend for the 25th straight year. “In breaking into two this will make it easier for each business to thrive based on its own characteristics.” IBM to spin off $19B business to focus on cloud computing. International Business Machines Corp. plans to spin off a major part of its information-technology services operations to accelerate the 109-year-old tech pioneer’s focus on faster-growing cloud-computing and artificial-intelligence businesses. Stock Advisor launched in February of 2002. "IBM is laser-focused on the $1 trillion hybrid cloud opportunity. The tech giant expects the spin-off company to be “more than twice the scale of its nearest competitor” in the industry. IBM’s has announced a plan to spin off the Infrastructure Services business unit in its Global Technology Services (GTS) group as a new, free-standing organization. ARMONK, N.Y. — IBM says it is breaking off a $19 billion chunk of its business to focus on cloud computing. Descubra en qué consiste y el consejo de OCU Inversiones sobre la compañía. IBM said the separation, expected to be tax-free to shareholders, would simplify its operations. They were up 5.2% to $130.47 at 1:53 p.m. in New York, the biggest gainer in the Dow Jones Industrial Average. “Unloading lower-growth businesses could unlock the true value of Red Hat, which we calculate at over $50 billion,” he said, adding that the spinoff is “exciting news for IBM.” The move will make IBM more of a software company and less of a low-growth services vendor, possibly aiding its valuation, Rana said. IBM was advised by JPMorgan Chase & Co. and Lazard Ltd. and the law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP. Let's conquer your financial goals together...faster. 1 min read. IBM will spin off the bulk of IBM Global Technology Services into a new, publicly traded, investment-grade company currently dubbed NewCo, Krishna said, promising “we will get a name eventually.” IBM is planning to spin off its "managed infrastructure services" division into a new public company. The 109-year-old tech company said Thursday it is spinning off its managed infrastructure services unit into a new public company, temporarily named NewCo. Analysis IBM will push through a major restructure at the IT outsourcing business it's spinning off, with 20,000 or more staffers facing the chop, an analyst estimated. The company wants to spin off its Global Technology Services division into its own publicly-traded company. Updates with CEO comments in seventh paragraph and analysts in eighth graph. IBM plans to dedicate itself to hybrid cloud, AI, quantum computing, and mainframe technologies, and is breaking out its $19B Managed Infrastructure Services group in order to do so. After separation, the companies together are initially expected to pay a combined quarterly dividend that is no less than IBM’s pre-spin dividend per share, according to the statement. His wheelhouse includes cloud, IoT, analytics, telecom, and gaming related businesses. In its presentation, IBM stated that it will maintain a single-A credit rating, while NewCo would target an "investment grade" credit rating -- which suggests it could assume more of IBM's debt after the split. IBM still can't compete against Amazon, Microsoft, or other market leaders in the high-growth public cloud market. The move is the fourth major transformation for IBM in its 109-year history and is the first big move by Chief Executive Officer Arvind Krishna, who took over from Ginni Rometty in April and has been pushing to revive growth after almost a decade of shrinking revenue. “In breaking into two this will make it easier for each business to thrive based on its own characteristics.”. IBM's (NYSE:IBM) stock recently rallied after the tech giant announced it would spin off its managed infrastructure services unit into a new company. Yahoo News is better in the app. CNBC's "Squawk Box" crew discusses. Now IBM is plotting its rebound, aiming to become the leader in what it calls hybrid-cloud software and services that let clients store data in private servers and in public clouds, including those run by Amazon and Microsoft Corp. The new spin-off doesn't have a formal name yet and is referred to as "NewCo" in IBM's marketing and investor relations material. IBM CEO Arvind Krishna said the split will help IBM focus on its cloud platform and … IBM will list its IT infrastructure services unit, which provides services including technical support for data centers, as a separate company with a new name by the end of 2021. The decision by tech giant IBM to break off a … With the spin-off, IBM expects to be more focused on hybrid cloud and AI solutions. Krishna told analysts to expect IBM to remain acquisitive as it continues hunting for revenue growth. According to Krishna, the hybrid cloud platform represents a $1 trillion market opportunity. The spin-off company is yet to be named. IBM plans to spin off infrastructure services as a separate $19B business. IBM said it aims to complete the transaction as a tax-free spinoff to IBM shareholders by the end of 2021. IBM expects to complete the process by the end of 2021. Before it's here, it's on the Bloomberg Terminal. IBM surged on Thursday after it announced plans to spin off its legacy managed-infrastructure business so it can focus on building up its cloud division. The company wants to spin off its Global Technology Services division into its own publicly-traded company. The slimmed-down company will only focus on managing and modernizing infrastructures with its IT services. IBM’s large legacy of IT products has been a drag on growth, according to Bloomberg Intelligence analyst Anurag Rana. FILE - In this March 18, 2019, file photo, the logo for IBM appears above a trading post on the floor of the New York Stock Exchange. Hybrid cloud services are generally popular with large companies that don't want to move all their data onto public clouds yet. Additionally, IBM will separate its Managed Infrastructure Services unit of its Global Technology Services division into a new public company ("NewCo"). IBM's spin-off of its weaker IT services unit was long overdue, and could finally clear the road for its cloud and AI businesses to flourish. The Global Technology Services (GTS) division, minus a few elements, will be carved out into a separate public company. CD Projekt Changes Developer Bonus Structure After Buggy Release, Are Tesla’s Shares Worth $90 or $780? Returns as of 12/13/2020. International Business Machines Corp. is spinning off a slower-growth business that manages corporate computer systems so it can focus on the boom in demand for cloud services and step up competition with Amazon.com Inc. and Microsoft Corp. The creation of NewCo will help IBM focus on its open hybrid cloud platform, which represents a $1 trillion market opportunity, the company said. Here’s what IBM investors need to know about the spinoff plans.. IBM will list its IT infrastructure services unit, which provides services including technical support for data centers, as a separate company with a new name by the end of 2021. The original IBM will focus on the “$1 trillion hybrid-cloud opportunity,” Krishna said. The move is part of IBM CEO Arvind Krishna's bid to return IBM to growth after years of decline, gains he said will come by focusing on hybrid cloud and AI. "IBM is laser-focused on the $1 trillion hybrid cloud opportunity," said Arvind Krishna, IBM Chief Executive Officer. IBM said the separation, a tax-free spin-off to IBM shareholders, will likely be completed by the end of next year. 4 / 4. This shift will also help eliminate the long-running rivalry between the new, fast-growth part of IBM’s business and the old. IBM says it is breaking off a $19 billion chunk of its business to focus on cloud computing. "Focus normally allows for better utilisation of capital, better utilisation of skill, acquisition of right companies that serve the … But it has adapted and eventually prospered time and again. Here Are 3 Stocks to Buy and Hold Long Term, IBM Announces Its Second Cloud-Related Acquisition This Week, TruQua to Become IBM's Latest Cloud-Related Acquisition, 3 High-Yield Tech Stocks Currently on Sale, 2 Cheap Dividend Stocks You Can Buy Right Now, Copyright, Trademark and Patent Information. The 109-year-old tech company said Thursday, Oct. 8, 2020, it is spinning off its managed infrastructure services unit … Krishna earlier this year cut thousands of jobs as he began reshaping the business. Once the spin-off is completed, IBM will move from a No. But it's arguably smarter than sitting still and allowing its higher-growth cloud and AI businesses to cannibalize its legacy businesses. Moreover, the expansion of IBM's ecosystem of hybrid cloud services will feed more data to AI services like Watson. IBM has confirmed a "tax-free" spin-off of its Managed Infrastructure Services unit into a separately traded public company, expunging a part of Big Blue that has been shrinking and subject to years of cost-cutting. IBM plans to spin off the managed infrastructure portion of its Global Technology Services business into a new public company in a move that it said will help reverse years of declining revenue and serve customers more effectively. Red Hat's software is open source, so it's fully compatible with AWS, Microsoft Azure, and other leading cloud services. So instead of chasing those tech giants, IBM provides hybrid cloud services that help companies process the data that flows between the public and private clouds. The decision by tech giant IBM to break off a $19 billion chunk of its business to focus on cloud computing may benefit the company's Hudson Valley sites, Dutchess County officials believe. Meanwhile cloud revenue increased 30%. IBM to spin off $19B business to focus on cloud computing. It is trying to go the adaptation route once again. Yet IBM's total debt remains manageable and in investment-grade territory, even after its $34 billion takeover of Red Hat caused Moody's and S&P to slightly reduce its credit ratings. IBM to spin off $19B business to focus on cloud computing. Over the long term, IBM believes the hybrid cloud market represents a $1 trillion market opportunity. International Business Machines Corp. plans to spin off a major part of its information-technology services operations to accelerate the 109-year-old tech pioneer’s focus on faster-growing cloud-computing and artificial-intelligence businesses. IBM's decision to spin off $19B business met with optimism in Hudson Valley. October 8, 2020 GMT. IBM Spin-Off of Managed Infrastructure Services Signals “All-In” on Cloud In Cloud by Daniel Newman October 9, 2020 Leave a Comment The News: IBM said Thursday it would spin off its IT infrastructure unit into a new publicly traded company to focus its legacy business more on cloud computing, a high-margin segment that has seen a boost as companies increasingly ramp up their digital shift. The slimmed-down IBM, which generated $59 billion in revenue in the 12 months up to June 30, will focus on expanding its presence in the hybrid cloud market, which bridges the gap between public cloud services (like Amazon (NASDAQ:AMZN) Web Services and Microsoft (NASDAQ:MSFT) Azure) and on-site private clouds. IBM said it will take a $2.3 billion charge in the fourth quarter. It serves 4,600 clients and has an order backlog of $60 billion, according to a statement from IBM Thursday. It's too early to tell if IBM's big split, which will rack up roughly $1.5 billion in cash charges and $1 billion in non-cash charges, will pay off. “This is something that’s been long overdue and I think Arvind is making the right calls.” Forrester Research Inc. analyst Ted Schadler agreed. IBM plans to focus on hybrid cloud … IBM said the separation, a tax-free spin-off to IBM shareholders, will likely be completed by the end of next year. El gigante azul IBM anuncia un spin-off de su negocio de infraestructuras informáticas. IBM says it is breaking off a USD 19 billion chunk of its business to focus on cloud computing. Accenture consistently generates stronger revenue and earnings growth than IBM, but NewCo could fare better as it reinvests its profits into its core business instead of subsidizing the growth of IBM's cloud and AI businesses. IBM says it is breaking off a $19 billion chunk of its business to focus on cloud computing. The proposed split will be effected by a pro-rata spin-off to IBM shareholders, and the move will be tax-free for US federal tax purposes, IBM confirmed last week. IBM doesn’t want any distractions on the road to becoming a prodigious hybrid-cloud player, and today it eliminated one of those diversions … The News: IBM said Thursday it would spin off its IT infrastructure unit into a new publicly traded company to focus its legacy business more on cloud computing, a high-margin segment that has seen a boost as companies increasingly ramp up their digital shift. “We are redefining the future of IBM.” The new strategy will “unlock growth” on both sides of IBM’s business, the CEO said, and predicted the deal would provide “sustainable mid-single digit revenue growth” at IBM in the medium term. IBM announced it would execute a tax-free spin-off of the Managed Infrastructure Services business of its Global Technology Services segment called "NewCo". IBM claims this market represents a $500 billion market opportunity, and that NewCo currently has an order backlog of $60 billion. IBM plans to complete the spin-off by the end of 2021, but it's still unclear how many shares of NewCo each investor will receive. In 2018, IBM spent $34 billion to buy open source software provider Red Hat to aid that transition. Once an iconic blue-chip company, IBM’s star has faded over the years as its legacy in mainframe computing and IT services fell behind while newer technology firms like Amazon swooped in to dominate the emerging cloud-computing market. "IBM is laser-focused on the $1 trillion hybrid cloud opportunity. The IBM spin-off could also open opportunities for Indian IT companies to acquire new clients if some IBM customers decide to switch to other providers. The 109-year-old tech company said Thursday, Oct. 8, 2020, it is spinning off its managed … The separation is expected to take effect by late 2021. The move IBM announced Thursday would separate its unit that manages clients’ IT infrastructure and accounts for nearly a quarter of its sales … Have a confidential tip for our reporters? IBM's growth rate will rise by 100+ basis points following the spin-off, the analyst predicted. (AP Photo/Richard Drew, File) Here’s what IBM investors need to know about the spinoff plans. 1 ranking on the 2020 CRN Solution Provider 500 list of North America’s largest solution providers to No. Let's review four key things investors should know about Big Blue's upcoming split. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. IBM said it expects to complete the process — a tax-free spin-off for shareholders — by the end of 2021. CEO Krishna is taking decisive step to push into hybrid cloud, Legacy IT services had long been a drag on growth for IBM, IBM to Spin Off Infrastructure Services Unit. This creates two industry-leading companies, each with strategic focus and flexibility to drive client and shareholder value. IBM's spin-off of its weaker IT services unit was long overdue, and could finally clear the road for its cloud and AI businesses to flourish. Stay in the know at a glance with the Top 10 daily stories. Post spin-off, IBM will focus on its open hybrid cloud platform and Artificial Intelligence (AI) capabilities and accelerate clients’ digital transformation journey. “Creative destruction of enterprises is often needed to compete in the new world, and change is the only constant,” said Mishra. Investors cheered the move, which marks Arvind Krishna's boldest decision as IBM's CEO since taking the helm in April. IBM set to spin-off managed service business to focus on hybrid cloud 2 months ago . But the split will end IBM's brief stint in that elite group, since the two companies will only pay a combined quarterly dividend that is "no less" than IBM's current dividend -- which nets a forward yield of 5.1%. ARMONK, N.Y. — IBM says it is breaking off a $19 billion chunk of its business to focus on cloud computing. IBM will spin off part of its Global Technology Services division into a new public company that represents $19 billion in revenue. IBM expects most of its revenue to come from "high-value cloud software and solutions" with "more than 50% of its portfolio in recurring revenues" -- so its sales and profits could rise significantly after the split. IBM ended the second half of 2020 with $64.7 billion in total debt, down 11% from a year earlier, and it generated a free cash flow of $11.5 billion over the previous 12 months. 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