Will IBM's Spinoff Actually Benefit Shareholders?
International Business Machines (NYSE: IBM) announced an intriguing spinoff this week to accelerate its cloud and artificial intelligence (AI) growth strategy. Whether the spinoff will generate operational benefits remains to be seen, but Big Blue shareholders should still profit from this decision.
Over the last several years, the tech giant has been shifting its business to the cloud to offset the decline of its legacy activities. It accelerated that transformation with the acquisition of cloud specialist Red Hat for $34 billion in 2019. As a result, trailing-12-month (TTM) cloud revenue of $23 billion represented 30% of total revenue at the end of last quarter, up from 2% in 2012.
Yet because of divestitures and struggling legacy businesses, revenue dropped from $105 billion in 2012 to $76 billion over the last 12 months.
Source Fool.com
