IBM is preparing to sell its Watson Health company in San Francisco, which generates almost $1 billion in annual sales, but is not profitable.
IBM’s CEO Arvind Krishna is making moves to streamline the company and become more competitive in cloud computing, an employee announced that IBM is considering a potential sale of its Watson Health unit. In recent years, Watson was one of IBM’s highest-profile initiatives and a big bet on the growing healthcare industry, although outcomes disappointed in part because doctors were reluctant to adopt artificial intelligence.
IBM is researching options for the unit that could include a sale to a private-equity firm or industry player, or a merger with a blank-check company. IBM currently has a $108 billion market cap, well behind cloud-computing competitors like Amazon and Microsoft.
Cognitive applications sales, which include Watson Health, came to $1.5 billion in its fourth quarter, a decline of 2% year over year. After the business missed Q4 sales expectations, a poor cloud and cognitive software results saw IBM shares fall 6.6%, reporting its fourth straight quarter of revenue decline.
In Q4 (December 2020 quarter), sales totalled $20.4 billion, down 6% (on year) and slightly below the $20.63 billion consensus.
