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IBM Contemplates Watson Health Business Divestment To Focus On Cloud: WSJ

  • International Business Machines Corp. (NYSE: IBM) is contemplating the divestment of its IBM Watson Health business to focus on its core cloud computing business, the Wall Street Journal reports.
  • The company is exploring options, including its sale to a private-equity firm sale or industry player or a merger with a blank-check company.
  • IBM has to catch up to its cloud computing peers like Microsoft Corporation (NASDAQ: MSFT) and Inc (NASDAQ: AMZN), which are already in the trillion-dollar valuation club.
  • Watson Health employs artificial intelligence (AI) to assist hospitals, insurers, and drug makers for data management with $1 billion in annual revenue, and it is not yet profitable. Its popular brands include Merge Healthcare, Phytel, and Truven Health Analytics.
  • WSJ notes that the valuation isn't clear yet, and there may not be a sale.
  • Watson was one of IBM's significant initiatives in recent years, as the company made billon dollar bets in acquiring health-related businesses that are now part of IBM Watson Health. 
  • With physicians hesitant to adopt AI, Watson Health's results have been less pleasing than IBM anticipated.
  • Price action: IBM shares were up 0.64% at $121.50 in the pre-market session on the last check Friday.

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