IBM To Focus On Open Hybrid Cloud Platform; To Spin-Off Managed Infrastructure Services Unit

IBM (IBM) announced the company will separate its Managed Infrastructure Services unit of its Global Technology Services division into a new public company. Going forward, IBM will focus on its open hybrid cloud platform. The new company will be entirely focused on managing and modernizing client-owned infrastructures. The separation is anticipated to be achieved as a tax-free spin-off to shareholders, and completed by the end of 2021.

IBM said it will move from a company with more than half of its revenues in services to one with a majority in high-value cloud software and solutions. The company will have more than 50% of its portfolio in recurring revenues.

IBM is also taking action to simplify and optimize its operating model which includes streamlining its geographic model and transforming its go-to-market structure. The company is also continuing to consolidate its shared services.

Following the deal, the companies together are initially expected to pay a combined quarterly dividend that is no less than IBM’s pre-spin dividend per share. Following the completion of the separation, each company’s dividend policy will be determined by respective Board.

IBM issued preliminary third quarter financial results. The company expects to report GAAP earnings per share from continuing operations of $1.89, and operating (non-GAAP) earnings per share of $2.58. Analysts polled by Thomson Reuters expect the company to report profit per share of $2.58, for the quarter. Analysts’ estimates typically exclude special items.

IBM expects to report third quarter revenue of $17.6 billion. Analysts expect revenue of $17.54 billion, for the quarter.

Shares of IBM were up nearly 5% in pre-market trade on Thursday.

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