IBM's PC business running at loss for years
IBM's PC business running at loss for years
IBM is going ahead with the sale of its PC operations to China's Lenovo Group, despite a recent revelation from a Securities and Exchange regulatory filing which has found that this sector has been running at a loss for the last few years.
The report has showed that IBM's PC division last US$258 million in 2003, US$171 million in 2002 and US$397 million in 2001. Also, in the first six months of 2004, it lost US$139 million.
Lenovo has been excited about the acquisition of this unit, claiming the agreement will form the third-largest PC business in the world.
IBM will have an 18.9 percent ownership share in Lenovo Group and is expected to recognise a gain on the sale following completion of the transaction.
Despite the losses, IBM still remains upbeat about sales following Lenovo's acquisition. Samuel J. Palmisano, IBM's chairman and chief executive officer, said: "In Lenovo we have a partner with powerful competitive capabilities in China and Asia and in consumer desktop PCs. We have worked very carefully with Lenovo to put in place all the elements of a strong, successful, enduring global alliance."
Yuanqing Yang, the current president and chief executive officer of Lenovo, added: "The development of the Internet brings both great opportunities for the development of the PC industry and also significant challenges. To succeed, PC companies need to have global scope, leading-edge technology and highly efficient operations.
"Through acquiring IBM's global PC business and forming a strategic alliance with IBM, Lenovo will absorb and integrate the skills from both sides and acquire global brand recognition, an international and diversified customer base, a world-class distribution network with global reach, more diversified product offerings, enhanced operational excellence and leading-edge technology."
These are highly optimistic comments considering the recent negative history of the PC unit, but with the continued support of IBM, combined with the new extra expertise provided by Lenovo, its fortunes could now turn around in the future.
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