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IBM may sell its $1B Watson Health business: Report
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IANS | 20 Feb, 2021
IBM is mulling to sell its Watson Health business that is generating nearly $1 billion in annual revenue but is not profitable.
The
Wall Street Journal reported that IBM is exploring a potential sale of
its Watson Health business, as CEO Arvind Krishna "moves to streamline
the company and become more competitive in cloud computing".
"Watson
was one of IBM's highest-profile initiatives in recent years and a big
bet on the growing healthcare sector, though results disappointed in
part because physicians were hesitant to adopt artificial intelligence,"
the report said on Friday.
"IBM is studying alternatives for the
unit that could include a sale to a private-equity firm or industry
player or a merger with a blank-check company," the report added, citing
sources.
IBM currently has a market value of $108 billion, way behind Cloud-computing rivals like AMAzon and Microsoft.
In
its fourth quarter, cognitive applications revenue, which includes
Watson Health, came to $1.5 billion, a decrease of 2 per cent year over
year.
IBM Watson was one of the "strategic imperatives" under former CEO Ginni Rometty.
A
weak cloud and cognitive software performance saw IBM shares sliding
6.6 per cent after the company missed Q4 revenue estimates, posting its
fourth straight quarter of revenue decline.
The Q4 (December 2020
quarter) sales totalled $20.4 billion, down 6 per cent (on-year) and
slightly below the $20.63 billion consensus.
Cloud and Cognitive
Software sales dropped 5 per cent to $6.8 billion, below the $7.18
billion estimates. Last quarter, this segment was up 7 per cent.
IBM
has appointed Martin Schroeter as the Chief Executive Officer of the
independent company that will be created following the separation of
IBM's Managed Infrastructure Services business �NewCo'.
NewCo
will focus on the management and modernisation of IT infrastructure in
every industry around the world. The previously announced separation is
expected to occur by the end of 2021.
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