International Business Machines (NYSE: IBM) is splitting its considerable enterprise apart in a move being cheered by investors of the 109-year-old tech firm. The breakup will allow IBM to focus on growing its cloud computing and AI divisions.
The breakup of Big Blue was announced on Thursday. In its press release, IBM stated that it would be focusing on a new growth strategy that included separating its Managed Infrastructure Services division into a new, publicly-traded company. The new focus of IBM, according to the release, was the "hybrid cloud", a mixed storage scheme comprised of on-site and cloud-based data storage.
"Our multi-year transformation created the foundation for the open hybrid cloud platform, which we then accelerated with the acquisition of Red Hat. At the same time, our managed infrastructure services business has established itself as the industry leader, with unrivaled expertise in complex and mission-critical infrastructure work. As two independent companies, IBM and NewCo will capitalize on their respective strengths. IBM will accelerate clients' digital transformation journeys, and NewCo will accelerate clients' infrastructure modernization efforts. This focus will result in greater value, increased innovation, and faster execution for our clients." Said IBM Executive Chairman Ginni Rometty.
The move isn't out of character for IBM, which has made similar divestment calls in the past that paid off for the company in the long run. Since the '90s, IBM has divested in networking, PCs, and semiconductors.
In any case, the move by CEO Arvind Krishna to split the company apart is being lauded by investors. The announcement, which was released at 6:30 EST, may have had a hand in the 5.5% jump that IBM's stock took in pre-market trading on Thursday. The leap from $124.06 to $130.86 was followed by another bump in early trading, bringing IBM to a daily high of $133.38 by 11, before slumping slightly to end the day at $131.49. IBM's shares slumped during trading on Friday, ending 2.9% down from the day's opening price, resting at $127.79 as the trading for the week wrapped up.