International Business Machines Corp. is looking into dealing its AI-pioneering Watson Health unit so the parent can move more nimbly into cloud computing, the Wall Street Journal is reporting.
“People familiar with the matter” tell WSJ that IBM is open to various arrangements, including a sale to a current Watson competitor or to a private-equity firm, or even a merger with a blank-check company.
The sources also say Watson Health, which some observers have for years considered a spectacular IBM fumble, is doing around $1 billion of business a year yet still isn’t turning a profit.
“It isn’t clear how much the business might fetch in a sale, and there may not be one,” WSJ comments.
The paper suggests a connection between the development and the 2020 appointment of Arvind Krishna to succeed longtime CEO Ginni Rometty.
Also in the mix is the recent placement of Jim Whitehurst, former CEO of $33 billion IBM acquiree Red Hat, as IBM’s first president in decades.
“IBM saw the deal for Red Hat, the biggest in its history, as an opportunity to gain on competitors in cloud computing,” WSJ reports. “It has said it is aiming for sustainable single-digit revenue growth after the planned spinoff of its managed-infrastructure business, which generates about $19 billion in annual revenue. IBM’s sales have fallen in more than two dozen quarters in the past decade.”
WSJ coverage here.