IBM in talks with Lenovo over potential x86 server business sale

By on
lenovo, ibm, servers

Almost a decade after famously unloading its personal computer business to Lenovo, IBM is once again looking at the Chinese firm over a potential deal to sell off its System x server business. According to reports from The Wall Street Journal and CRN, the company is seeking between $5 billion and $6 billion for the business, which sells low-priced x86 servers traditionally used to power large corporate data centers.

News of a possible sale comes shortly after IBM announced disappointing earnings for the first quarter of 2013, with a one percent drop in profits and sales figures that missed forecasts by $1.3 billon. Total revenue for hardware systems declined 13% during the quarter, and while sales of mainframes rose 7%, System x server sales in particular dropped by 9 percent, dragging hardware profits down to a pretax loss of $405 million.

Lenovo -- along with Apple -- has been consistently one of the fastest-growing computer companies for several quarters at a time pretty much everyone else is seeing a dramatic decline in sales. The Chinese company has already surpassed Dell to take the number two position in PC market share, and is vying with Hewlett-Packard to become the world's biggest PC maker by shipment volume -- according to IDC they briefly took the crown during the third quarter of 2012 and it’s just a matter of time before they leap past HP again.

While the company seems to be doing remarkable well in the consumer space, a move into the server business could help Lenovo compete against HP and Dell in the business market.

This morning they directly admitted to the negotiations -- although without mentioning IBM by name. In a clarification announcement to stockholders, Lenovo said it "is in preliminary negotiations with a third party in connection with a potential acquisition”, adding that “no material terms concerning the Potential Acquisition have been agreed and the Company has not entered into any definitive agreement.”

Add New Comment

TechSpot Members
Login or sign up for free,
it takes about 30 seconds.
You may also...
Get complete access to the TechSpot community. Join thousands of technology enthusiasts that contribute and share knowledge in our forum. Get a private inbox, upload your own photo gallery and more.