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IBM Considering Sale of Watson Health Division: Report

Unprofitable health data management unit has about $1 billion in annual revenue.
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International Business Machines  (IBM) - Get International Business Machines Corporation Report is considering selling its unprofitable Watson Health division, according to a published report late Thursday.

The company’s potential move comes as it lags far behind rivals  (AMZN) - Get Inc. Report, and Microsoft   (MSFT) - Get Microsoft Corporation Report in the cloud-computing surge, The Wall Street Journal reported.

The Watson unit has about $1 billion a year in revenue but doesn’t currently turn a profit, according to the report. It uses artificial intelligence to help manage and analyze health data ranging from mammograms and MRIs to patient communications.

IBM is considering a sale to a private-equity company, or a merger with a blank-check company, the paper reported, citing people familiar with the matter.

IBM CEO Arvind Krishna, who came into the job in April, is pursuing efforts to streamline the company’s operations and gain traction amid the ongoing shift by companies and organizations to cloud-based computing. That shift has only been accelerated by the COVID-19 pandemic, which has seen millions of workers shift to working from home.

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IBM shares fell 3 cents, or 0.02%, to  $120.70 in after-hours trading. 

The stock has fallen about 9% since the company last reported earnings on Jan. 21.

In the current quarter, IBM is expected to report net income of $1.5 billion, or $1.68 a share, on sales of $17.4 billion, based on a FactSet survey of 14 analysts.

In the same period a year ago the company posted earnings of $1.84 a share on sales of $17.6 billion. It reported net income of $3.7 billion.

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