IBM In Talks To Sell Server Unit Again

posted 21 Jan 2014, 08:20 by Mpelembe [ updated 21 Jan 2014, 08:21 ]

BVO - IBM is talking to Lenovo ... again, according to sources. It's all over IBM's server business, which Lenovo walked away from in talks last spring over pricing. This time, analysts say IBM's low-end server unit could fetch $2.5 to $3 billion.

Lenovo says it's in preliminary talks over an acquisition but wouldn't name the seller. Media reports said Dell could jump in as a potential buyer.

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IBM may be more willing to do a deal now after several quarters of weak earnings and a sour stock performance that made it last year's dog of the Dow. A deal would help IBM shift further away from hardware toward higher margin software and services. It has already sold off its PC business to Lenovo and its printer unit.

Wells Fargo senior analyst Maynard Um says a sale would be a good move for IBM, saying "we ... believe it could aid in the recovery of its China business." IBM had suffered a 40 percent drop in its hardware sales in China last quarter.

Any deal could involve a review by regulators over data security concerns.

IBM isn't commenting on the news. But analysts will likely ask questions when Big Blue reports its earnings later today.

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