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IBM weighs sale of Watson Health to focus on the cloud, WSJ says

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International Business Machines Corp. is considering selling its IBM Watson Health business to streamline operations and focus on the fast-growing cloud computing arena, the Wall Street Journal reported, citing unidentified sources.

IBM is exploring a range of alternatives from a sale to private equity or merger with a blank-check company, the Journal reported. The unit, which helps health care providers manage data, generates about $1 billion of annual revenue and isn’t profitable, it cited the people as saying.

IBM has been trying to boost its share of revenue from hybrid-cloud software and services, which lets customers store data in private servers and on multiple public clouds, including those of rivals Amazon.com Inc. and Microsoft Corp. IBM bought RedHat for $34 billion in 2018 to boost this effort. It has also heavily promoted its Watson artificial intelligence systems.

Last October, Chief Executive Officer Arvind Krishna announced he would spin off IBM’s managed infrastructure services unit into a separate publicly-traded company. The division, which is currently part of the Global Technology Services division, handles day-to-day infrastructure service operations, like managing client data centers and traditional information-technology support for installing, repairing and operating equipment.

While the unit accounts for about a quarter of IBM’s sales and staff, it has seen business shrink as customers embraced the shift to the cloud, and many clients delayed infrastructure upgrades during the pandemic. The spinoff is scheduled to be completed by end of 2021.

—  Edwin Chan (Bloomberg)