https://finance.yahoo.com/news/ibm-board-directors-approves-separation-123600295.html
8 replies (most recent on top)
It seems IBM used the DXC model to take Kyndryl public. Both will come public with approx 140 million shares. Both have revenue of approx 19 billion. DXC has more employees 138k vs 90k and that may move the needle for Kyndryl’s lower margins. Kyndryl will have to address those lower margins and yes you are correct that Hybrid IBM will keep the majority of the dividend payment. Kyndryl only has 800 million in free cash flow, so 15-25 cents a share per quarter is about all they can afford IF they still want to invest in the company going forward. I fully expect Kyndryl to exit some of the lower margin engagements and to cut head count as a result of those actions
Wallstreet will soon discover that after dumping the shrinking business to kyndryl ibm's revenue still isn't growing lol. Actually they already know but they'll start asking questions in 1q22.
AK was just buying time to make his millions along with other svps.
If kyndryl guys are smart they should take inspiration from lenovo and make it successful and show the world how ibm held them back. But since the ceo is ibmer, i have little faith.
I doubt if IBM will drop by the full 20% since Kyndryl has negative growth and much lower margins, along with worse free cash generation. But yes IBM will go down by xx%, I would guess 10 - 15% but that's just one man's opinion, and a lot also depends on how much of the dividend IBM retains (I'm guessing a lot of it). The bigger question for me is what will Kyndryl be priced at by the end of, say, its first week of trading after the market better gets its head around the company. On that one, I have no idea what the stock price will be.
At the end of the day, give it 6 months and the shares of both companies will be lower.
IBM is dumping the revenue by approx 26% 19/74 billion, BUT they are keeping the profitable parts. Spin-off is taking 1 billon out of 10.8 billion of free cash flow. So yes they should see a move down, but most likely not by a lot as IBM shares should see some price to earnings expansion
So does that mean that IBM stock price will be adjusted DOWNWARD by ~20% after the market's close on Oct 25th ... since after that time new IBM shareholders will no longer be receiving the free Kyndryl shares, and IBM Revenue will have been reduced by ~20% (i.e, GTS revenue will ALL be flowing to Kyndryl)?
"Each holder of IBM common stock will receive ONE SHARE of Kyndryl common stock for every FIVE SHARES of IBM common stock held on October 25, 2021"
"+ Record date for distribution of Kyndryl shares will be October 25, 2021
+ Distribution date for Kyndryl shares anticipated to be November 3, 2021"