International Business Machines (IBM) Corp. is considering a sale of its IBM Watson Health Business. Someone with knowledge of the matter said that it is a move that will help newly appointed Chief Executive Officer Arvind Krishna focus on the speedily growing cloud computing operations.
Deliberations are at an initial level, and the company might not pursue such a deal, said the person, who was asked not to be identified discussing private talks. According to The Wall Street Journal, IBM is exploring a range of alternatives, right from the sale to a private equity firm or a merger with a blank check company.
IBM has put constant efforts to boost its share of revenue from hybrid-cloud software and services. It helps customers in storing data in private servers and multiple public clouds, including rivals Amazon.com Inc and Microsoft Corp. And IBM bought Red Hat for USD 34 billion in 2018 to boost the effort of storing data.
As a testimony to the company’s bet on the cloud, Krishna said in October that he would spin off IBM’s managed infrastructure services unit into an entirely distinct publicly-traded company.
This division is part of the Global Technology Services division currently. It handles day-to-day infrastructure service operations like management of client data centers and traditional IT support for the tasks such as installing, repairing, and operating equipment. Also, the unit accounts for a quarter of IBM’s sales and staff. However, the unit has also seen the business going down as customers preferred moving to the cloud, and many clients postponed infrastructure upgrades during the pandemic.
The spinoff is scheduled to get completed by the end of 2021.
One of the core operations is to offload IBM Watson Health, which helps healthcare providers manage data. It would further Krishna’s efforts of streamlining the company. The unit gives out an annual revenue of about USD 1 billion, and it isn’t profitable, according to the Journal. IBM embarked on Watson with heavy goals, but many of such ambitions, such as revolutionizing healthcare, did not work out in a planned way. There are products that didn’t match up to the company’s hype.