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IBM sells its PC desktop business
Latest Update - Lenovo have sealed the deal to buy ibm's PC business. This deal instantly catapults them onto the world stage as a major player and they are set to use IBM's Think brand to sell their products. Think Thinkpad and Thinkcenter. Lenovo will also be recruiting staff from IBM's PC departments to prevent losing expertise to rivals.
Insider sources have revealed that IBM has begun quiet talks, looking to sell its personal desktop computer business, which pioneered the computing market in its infancy, and has valued it up to USD$2 billion.
IBM shares surged on Wall Street on speculation that the corporate services giant, which is nicknamed "Big Blue" is in advanced stages of discussions with at laest two potential buyers for the business. One alleged interested party is Lenovo, China's largest maker of personal computers.
IBM has been under shareholder pressure for a while to divest itself of its PC arm, where margins are increasingly thin and competition increasingly thick, so that it can concentrate on the more lucrative corporate server and computer services business which over the past decade has earned an increasing portion of the company's profit margin.
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Company spokesmen had not comment on whether it was on the verge of a sale, as was reported in The New York Times today.
In the 1980s, IBM kickstarted the personal computing market by bringing affordable computers into the consumer mainstream. However, in recent years, IBM has lost ground and has since ceded its dominant position to Dell and Hewlett-Packard, and is presentedly ranked as the third-largest PC maker in the world.
IBM, which last month was credited with having created the world's fastest supercomputer and in the process regaining the title back from the Japanese, is likely to include all of its desktop, laptop and notebook computers in the business sale. The deal could be worth between US$1 billion to US$2 billion, according to financial analysts.
Rumors have surfaced that IBM is talking to Lenovo, which controls over a quarter of China's PC market, comes after reports from Lenovo that it was poised to set up a joint venture with IBM for manufacture of PC desktop computers.
Analysts are also watching the sale closely, as IBM's exit from the business of making PCs could be an acknowledgement that it is almost impossible to reverse the ever- decreasing margins in the market. Hewlett-Packard is also presently struggling to enhance the profitability of its PC business, and is relying heavily on its printing arm for revenues.
- A business editorial by BusinessAsk.com
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