International Business Machine Corp. (IBM) has announced that it will be splitting into two publicly traded companies with a main aim of focusing on high margin cloud computing. This decision has taken many unaware since no one was expecting the 109 year old company to diversify away from its traditional business.
The company will list its IT infrastructure services unit as a separate company with a new name by the end of 2021. The IT unit serves around 4,600 clients in 115 countries with technical support. Currently the unit has backlogs totaling to $60 billion.
Chief financial officer of IBM James Kavanaugh told reporters that the new company will employ 90,000 workers and its chain of management will be decided in the next few months.
The company has a total labor force totaling to 352,000 employees the CFO said costs of separating the company will amount up to $5 billion.
IBM’s Chief Executive Officer Arvind Krishna, applauded the move as a well calculated strategic move which will play a very significant role in shifting the business model of the company.
“We divested networking back in the ‘90s, we divested PCs back in the 2000s, we divested semiconductors about five years ago because all of them didn’t necessarily play into the integrated value proposition,” said the CEO.