Is IBM splitting? Analyst says move would be ‘challenging’

IBM (NYSE: IBM) is set to announce earnings after the markets close Tuesday afternoon. But is bigger news in the works?

An analyst at Morningstar tells financial news website Benzinga that there are rumors IBM may split. But he also says such a move, which HP already is doing in preparing to spin off its PC division, would be “challenging.”

Benzinga reported the discussion Tuesday before the markets closed.

“I personally think that it’s a bit premature, and I also think that separating IBM into the hardware, software and services components would be really challenging to do,” said Morningstar’s Peter Wahlstrom.

“Wahlstrom said that there are rumors International Business Machines Corp.  will announce further divestments or even a split,” Benzinga reported.

Dividing into two or three companies also would leave IBM in a weaker competitive situation, he said. 

IBM is expected to report $5.41 earnings per share and $24.77 billion in revenue, according to Thomson Reuters. Earnings were $6.16 per share and revenue was $27.70 billion in the previous quarter as reported in October. 

Big Blue recently underwent a major reorganization as WRAL TechWire reported a week ago.

IBM Chair and CEO Ginny Rometty has poured resources into areas such as the “Watson” supercomputer and cloud computing while putting less emphasis on hardware.

IBM sold its x86 server business to Lenovo last year and also is selling most of its semiconductor business.

However, IBM did unveil an upgraded lineup of mainframe computers last week. 

In October, Rometty rejected any talk about splitting the company. 

 Read more: http://www.benzinga.com/analyst-ratings/analyst-color/15/01/5161585/morningstar-analyst-on-rumored-ibm-split-separating-woul#ixzz3POdEKe77