IBM will spin off its managed infrastructure business as a new publicly traded company in a tax-free deal for IBM shareholders. The spinoff is expected to be completed by the end of 2021.

The deal follows IBM’s continued transition to the cloud business, which was heightened in 2019 after it acquired RedHat for $34 billion to help bolster its cloud offering.

With IBM able to focus on growing its cloud business, the company said it will have “an enhanced financial profile with a clear trajectory for improved revenue and profit growth,” the company said.

News of the International Business Machines development was well received by investors, with shares of IBM surging as much as 9% in Thursday trades.

Additionally, International Business Machines released preliminary third quarter earnings results. The company expects to report revenue of $17.6 billion, and adjusted earnings per share of $2.58, beating analyst revenue estimates of $17.5 billion, and meeting analyst earnings-per-share expectations.

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