IBM Shares Rose 5.98% on Thursday After the Company Announced It Will Spin Off Its IT Infrastructure Unit

2020-10-9 13:49

Coinspeaker
IBM Shares Rose 5.98% on Thursday After the Company Announced It Will Spin Off Its IT Infrastructure Unit

Shares of International Business Machines Corp (NYSE: IBM) closed Thursday’s trading session 5.98% higher than the opening value, $124.07. The jump is attributed to three positive news that the company released yesterday through its website.

First, IBM indicated that it will focus on hybrid cloud global business. Secondly, IBM announced that it will spin off its Managed Infrastructure Services unit of its Global Technology Services division into a new publicly-traded company. And lastly, the company released its preliminary 2020 third-quarter results indicating a growth in its revenue.

During the pandemic, IBM shares have had mixed results whereby they were down 1.90% year to date through Thursday, up 13.64% in the past three months through Thursday, up 9.07% in the past one month, and were up 8.57% in the last five days through Thursday.

IBM Internal Reorganizations

IBM has reorganized its internal structure to tap into new global opportunities brought forth by the pandemic. This comes as more companies incline towards remote working and cloud-based businesses to flatten the coronavirus virus infection rate curve.

“Now is the right time to create two market-leading companies focused on what they do best. IBM will focus on its open hybrid cloud platform and AI capabilities,” said Arvind Krishna, IBM Chief Executive Officer.

IBM’s new split will be a huge boost to its parent company revenue as it will have a much greater impact than before it was managed by the parent company.

Notably, the new publicly traded company will be in a position to partner with more cloud-based companies. Hereby growing its global impact immensely and maintaining IBM’s general global competitiveness.

IBM shareholders are set to benefit directly from the spin-off, as they will acquire proportional shares in the newly formed publicly-traded company.

Forward, IBM investors and analysts can now comfortably predict the company’s future returns. This is primarily because IBM will be expecting over 50% of its portfolio in recurring revenues. According to IBM, the new spin-off company, which has approximately 4600 technology-intensive companies, has regulated clients in over 100 jurisdictions.

Notably, IBM reported its preliminary Q3 report, whereby it expects to report a revenue of $17.6 billion. In addition, the company reported GAAP diluted EPS from continuing operations of $1.89 and operating (non-GAAP) EPS of $2.58.

IBM Shares Rose 5.98% on Thursday After the Company Announced It Will Spin Off Its IT Infrastructure Unit

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