Thursday, January 23, 2014

Quick Look at IBM and Lenovo

It was reported this week that IBM will sell its x86 division to Lenovo for $2.3 billion. This came after IBM reported its seventh straight quarter of declining revenue, at $27.7 billion for Q4-2013. Details show that Software, Services and Global Financing divisions each grew, but Systems and Technology was the worst-performing division, declining in revenue by 26.1%. The deal with Lenovo allows IBM to offload the low-end server business. The x86 business is "the generic name for Intel processors released after the original 8086 processor."

This isn't the first deal between IBM and Lenovo. In 2005, Lenovo purchased IBM's PC business, and later acquisitions propelled Lenovo to be world's top PC company last year. While IBM had a disappointing 2013, being the only company in Dow Jones to decrease, Lenovo posted record-high revenue and profit in its latest quarterly financials released in November. Notebooks consisted over half of Lenovo's revenue, and its industry outlook cites that "customers no longer see Tablet as PC replacement."

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