IBM has announced it is dividing into two public companies within efforts to focus on higher-margin businesses such as artificial intelligence and cloud computing.

A new firm will concentrate on legacy IT infrastructure, to be introduced in 2021.

Shares in International Business Machines closed almost 6% higher following the announcement, BBC reports.

The action indicates the latest shift by the world’s first large computing company to move away from its traditional businesses.

Chief Executive Arvind Krishna said of the initiative: “We divested networking back in the 1990s, we divested PCs back in the 2000s, we divested semiconductors about five years ago because all of them didn’t necessarily play into the integrated value proposition.”

Krishna played a key role in IBM’s $34 billion acquisition of cloud company Red Hat last year.

As it stands, dominating the cloud services market are Amazon Web Services and Microsoft.

Furthermore, the CEO said in a blog: “To drive growth, our strategy must be rooted in the reality of the world we live in and the future our clients strive to build. Today, hybrid cloud and AI are swiftly becoming the locus of commerce, transactions, and over time, of computing itself.”

With a workforce of currently 352,000 employees, IBM announced it forecasts the division into two companies to cost $5 billion.

IBM’s legacy businesses will be operated within a new firm called NewCo and will include its “Managed Infrastructure Services” division.

According to analysts, the move is an attempt by IBM to focus on more profitable business models.

Wedbush Securities analyst Moshe Katri stated: “IBM is essentially getting rid of a shrinking, low-margin operation given the cannibalizing impact of automation and cloud, masking stronger growth for the rest of the operation.”

The chief executive went on to add that NewCo will have annual revenue of $19 billion and will serve 75% of Fortune 100 companies on its share market debut.

Around 90,000 people will be employed at NewCo, which will have a permanent name in 2021, as well as a share market listing.