IBM is getting ready to calve a new public company into the world _ one that could mean a lot of changes for the more than 1,000 employees at its Research Triangle Park offices.
On Thursday, IBM said it plans to separate a large part of its Global Technology Services division into a new, publicly traded company. The new company, for the time being, will be called NewCo, and IBM says it will share more details about it in the coming months.
It's a move that will separate a business division that manages IT infrastructure for clients and makes up almost a quarter of the company's sales and staff, according to The Wall Street Journal. But that large segment isn't growing and has hurt IBM's standing with investors in recent years. Earlier this year, IBM said it was restructuring its services business, and said it would also need to cut jobs, The News & Observer reported.
The separation, which should be finalized in 2021, would allow the company to highlight its much faster growing cloud-computing business, which is highlighted by its $34 billion purchase of Raleigh-based Red Hat last year.
"This represents a significant shift in our business model," IBM CEO Arvind Krishna said in a letter to employees. "The success we've had with Red Hat gives us confidence that this is the right move."
Krishna, who became the CEO of IBM earlier this year, was the architect of IBM's purchase of Red Hat. Red Hat's former CEO, Jim Whitehurst, is now president of IBM.
Krishna said in a press conference with reporters Thursday that the move will not have an immediate impact on IBM's headcount in the Triangle.
However, eventually there will a reshuffling of the office, as the RTP site has many employees who will eventually become part of NewCo.
"As we work through ... which employee goes to NewCo and which employee stays with IBM, that will be the biggest impact in the region, because the (RTP) site does have people from both sides on NewCo and IBM," Krishna said. "I think that's all I will say right now."
He did say Red Hat will continue to be an important factor going forward. Red Hat has continued to hire new employees at a brisk pace, despite the merger, The News & Observer previously reported.
"Red Hat is actually growing," Krishna said. "They need more and more people, so that's probably going to be increased (employment), not decreased."
"When I look at IBM," he added, "I think it also goes to growth down the road. And that, I hope, implies increased investment and increased employment everywhere."
IBM said it will take a $2.3 billion accounting charge to complete the spin off, which it described as tax free. The spin off would have around 90,000 total employees and had about $19 billion in sales in the past year, the company told investors. In total, IBM has more than 300,000 employees across the world and revenues of more than $70 billion.
The company added that the separated portion of IBM has business relationships with 4,600 businesses across the world, and estimates it competes in a $500 billion market.
IBM has spun off business divisions before. In2005, it sold its personal computer business to Chinese computer maker Lenovo.
Lenovo now has a large operation in Morrisville, where it employs thousands of people.
