IBM (NYSE:IBM) has announced a spinoff of part of its business as it looks to shift its focus.
Here’s what IBM investors need to know about the spinoff plans.
- The company wants to spin off its Global Technology Services division into its own publicly-traded company.
- Its goal in doing so is to shift the focus at IBM on cloud services.
- The spinoff will be tax-free and the company expects it to take place before the end of 2021.
- IBM notes that this will result in the majority of its revenue coming from cloud software and solutions.
- Currently, a little more than half of the company’s revenue comes from its services business.
- To go along with this, the company is looking to streamline its business.
- That includes consolidating some of its divisions to create an optimized operating model.
- IBM has yet to come up with a name for the new company that will be created by the spinoff.
- Even so, it points out that it will be the leading managed infrastructure services provider upon its creation.
- The new company will focus on maintaining and upgrading infrastructure systems for customers.
- IBM notes that the spinoff will still have investors receiving their dividends.
- It mentions that the combined dividends from each company won’t be lower than the current one offered by IBM.
- After that initial dividend, it will be up to each company’s Board of Directors to decide on dividend payments.
IBM stock was up 5.7% as of Thursday afternoon.
On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article.