IBM hangs 'for sale' sign on PC business

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The Independent Online
IBM is in talks to sell its personal computer business, which 20 years ago drove the explosion of the computing market, in a deal worth up to $2bn (£1.03bn).

IBM is in talks to sell its personal computer business, which 20 years ago drove the explosion of the computing market, in a deal worth up to $2bn (£1.03bn).

Shares in IBM, nicknamed Big Blue, surged on Wall Street on speculation that the corporate services giant was in detailed discussions with Lenovo, China's largest maker of personal computers, and at least one other potential buyer for the business.

IBM has been under pressure for some time to spin off its PC arm, where margins are increasingly thin, so that it can concentrate on the more lucrative corporate server and computer services business which over the past decade it has made its core offering.

The company would not comment on whether it was on the verge of a sale, as was reported in The New York Times.

IBM helped to transform the PC market in the 1980s by bringing computers into the consumer mainstream. It has now ceded its dominant position to others, and is behind Dell and Hewlett-Packard to rank as the third-largest PC maker in the world.

IBM, which last month was credited with having created the world's fastest computer, taking the title back from the Japanese, is likely to include all of its desktop, laptop and notebook computers in the sale. The deal could earn it between $1bn and $2bn, according to bankers.

The speculation that IBM is talking to Lenovo, which controls more than a quarter of China's PC market, comes after reports that it was poised to set up a joint venture with IBM.

If IBM were to exit from making PCs, it would be an acknowledgement that it is almost impossible to reverse the ever-decreasing margins in the market. Hewlett-Packard is also struggling to enhance the profitability of its PC business, and is relying heavily on its printing arm for revenues.

Analysts believe Asian manufacturers such as Lenovo are best able to cope with the falling PC prices, because of their low-cost operating models and the strong brand loyalty found locally where consumers are clamouring for the latest technology.

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