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IBM set to spin off managed infrastructure services to focus on hybrid cloud

(Image credit: Image Credit: Majestic B / Shutterstock)

Next year, IBM will split into two separate public companies, according to reports.

One part of the business will focus on hybrid cloud and artificial intelligence (AI), and is expected to be led by Red Hat, while the other part will focus more on legacy IT infrastructure.

We still don't know much about the new company, but it will reportedly handle managed infrastructure services, become operational next year and be spun off tax-free.

According to the BBC, the newly formed organization will be named NewCo.

“We divested networking back in the 1990s, we divested PCs back in the 2000s, we divested semiconductors about five years ago because all of them didn’t necessarily play into the integrated value proposition,” said IBM CEO Arvind Krishna.

To execute the process, IBM will have to shell out approximately $6.5 billion. It will deliver roughly $59 billion in revenue after the spin-off, with NewCo reaching $19 billion in sales, according to ZDNet.

NewCo is expected to have 4,600 “highly regulated” customers in more than 100 countries, as well as 90,000 employees.