IBM (NYSE:IBM) has announced a spinoff of part of its business as it looks to shift its focus.

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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.