The question really is can IBM exploit their monopoly power to raise profits faster than the cloud goes completely commodity. Newco needs a major haircut to compete. IBM is in the process of cutting (just look at Europe) IBM will continue down that path, or sell Newco off with the acquiring company doing the cutting, with the price of Newco baking that cutting into the deal. New IBM is playing in a very fast growing marketplace (cloud).
The issue is public cloud has already morphed into a commodity offering due to 5 major players competing. Hybrid cloud is still unique at least from a mainframe point of view, so it really boils down to can IBM exploit that. Remember for every Hybrid cloud IBM closes there is an ELA that doesn’t get sold. Redhat may be the catalyst to spur new engagements, but can IBM execute.
If yes, then we’ll see FCF grow at 4-6%, BUT IBM has a mountain of debt to pay off (Odds of growth 20%) If IBM loses the legacy at the speed it grows the Hybrid, we’ll see flat earnings UNLESS they continue to cut headcount (odds 60%) If they can’t get their act together, they will continue to shrink until someone decides to take them over. Most likely another hyperscaler who is better managed. (Odds 20%).