IBM Spins Off $19 Billion Infrastructure Unit to Focus on Cloud and AI
IBM is separating its $19 billion managed infrastructure services division into a new public company. This strategic move allows IBM to concentrate entirely on hybrid cloud and artificial intelligence growth.
IBM is taking a major step away from its hardware roots by spinning off its managed infrastructure services unit into a separate public company. This $19 billion business focuses on legacy infrastructure and digital transformation services, though it notably excludes IBM's server hardware operations. By separating this division, IBM aims to focus more directly on expanding its hybrid cloud and artificial intelligence offerings.
The newly independent company, which does not yet have a name, launches with massive scale right out of the gate. It employs 90,000 people and serves 4,600 enterprise clients across 115 countries. Additionally, the spun-off entity boasts a $60 billion backlog of business and claims to be more than twice the size of its nearest competitor in the infrastructure services space.
Meanwhile, the remaining IBM business generates approximately $59 billion in annual revenues and sees positive market reception from this strategic shift. The company's stock jumps roughly 10% on the news as it also provides updated Q3 guidance, expecting $17.6 billion in revenue. This separation underscores a broader industry shift, as IBM bets that legacy infrastructure servicing will not drive future growth while cloud technologies continue to rise.