December 8, 2004

It's official: IBM sells PC business to Chinese company

Author: Chris Preimesberger

Well, the rumors first published by the New York Times a few days ago turned out to be true. IBM said late Tuesday that it has agreed to sell its personal computer division to China-based Lenovo and accept a minority stake in its former rival valued at $1.75 billion.

Reuters and News.com reported that the two companies will form a complex joint venture that would make Lenovo the third-largest PC maker in the world, behind Dell and Hewlett-Packard, but still give IBM support in maintaining its well-established PC business. The acquisition is expected to be completed in the second quarter of 2005.

IBM started marketing personal desktop computers in 1981.

"Based on the emerging industry wide trend of consolidations, acquisitions and realignment, seeing IBM selling off its PC business should not come as a surprise to anyone," Shawn Sheik, principal of MyTechnologyAdvisor.com, a consultancy based in Santa Clara, Calif.

"As we move into 2005, we are likely going to see more and more consolidations and acquisitions where major players will focus on the lucrative software side of the technology market, offer unified solutions with bigger margins, and sell off their low-revenue generating operations to smaller players who are likely going to be more hungry, innovative and willing to accept thinner margins," Sheik said.

For more detail on the transaction, see this story at News.com.

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