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IBM may sell Watson Health to speed up restructuring

23 February 2021
3135
2 min.
9
IBM may sell Watson Health to speed up restructuring

Selling the division

IBM is in the early stages of talks to sell or spin off its unprofitable Watson Health division. This could help IBM streamline its business and speed up restructuring.

IBM (IBM) is considering selling or separating its Watson Health unit, as part of a restructuring that would involve divesting unprofitable segments and accelerating a move into the cloud computing business and developing a hybrid cloud platform. According to the Wall Street Journal, IBM is now in preliminary talks that do not guarantee that the sale or separation will take place.

IBM's Watson Health division includes several digital platforms, Merge Healthcare, Phytel and Truven Health Analytics, which provide various analytics services, using artificial intelligence technology to manage and analyse healthcare data (from mammography and MRI to patient communication). Clients include clinics, pharmaceutical companies and insurance companies.

Watson Health has annual revenues of about $1 billion, but is not profitable, according to anonymous WSJ sources.

Last October, IBM executives announced a decision to split the company and spin off its Managed Infrastructure Services division into a new public company by the end of 2021.

IBM aims to move away from selling on-premises servers and IT products to building hybrid cloud platforms. IBM has invested more than $120 billion over the past eight years to transform the company. This includes $29bn of capital expenditure on things like scaling cloud operations and artificial intelligence offerings, as well as expanding security and services capabilities.

Commenting on IBM's quarterly report in January, James Kavanaugh said that since October 2020, IBM has announced the acquisition of seven hybrid cloud and artificial intelligence companies.

IBM is vying for market share in cloud platforms with major competitors such as Amazon (AMZN), Microsoft (MSFT) and Alphabet Google (GOOG, GOOGL).

IBM has reported earnings per share growth only once in the past nine quarters, while its quarterly earnings have declined for all nine consecutive quarters.

IBM shares have fallen 19.34% over the past 12 months.

Persons1 and Companies8 in the news

Senior Vice President, Transformation and Operations of International Business Machines Corporation
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Phytel
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Microsoft
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Amazon
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