IBM Spins Off IT Infrastructure Division to Focus on Cloud and AI

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Bu Aeri] Information technology (IT) company IBM has decided to spin off its IT infrastructure division and focus on faster-growing businesses such as cloud computing and artificial intelligence (AI).

On the 8th (local time), The Wall Street Journal (WSJ) reported that IBM announced it would spin off the division managing clients' IT infrastructure into a new publicly traded company.

The IT infrastructure division accounts for nearly a quarter of the company's revenue and workforce. Last year, out of the company's annual revenue of $77.15 billion (approximately 88.8 trillion KRW), the IT infrastructure division earned $19 billion (approximately 21.9 trillion KRW), and about 90,000 of the total 352,600 employees work there.

WSJ described this move as the largest business divestiture planned by IBM, a pioneer in IT with a 109-year history.

The market welcomed IBM's spin-off decision. On that day, IBM's stock price rose 5.94% compared to the previous day on the New York Stock Exchange.

IBM, which has been around for over 100 years, has continuously shifted its core business to more profitable markets.

In the 1980s, IBM became synonymous with PCs by launching the IBM PC but sold this business to China's Lenovo in 2005. In 2015, IBM transformed into a "fabless" semiconductor company, continuing design but outsourcing manufacturing to semiconductor foundry GlobalFoundries.

WSJ pointed out, "However, none of these deals were as large as the spin-off announced today," and noted that this spin-off will "fundamentally change the structure of one of America's oldest and most iconic IT companies."

IBM has struggled in recent years, with revenue declining by 25% over eight years.

This spin-off also follows a workforce restructuring of undisclosed scale carried out by Arvind Krishna, who took office as CEO in April.

This content was produced with the assistance of AI translation services.