Chinese firm buys IBM PC business

[DVTimes]

IBM, the pioneer of the personal computer business, has sold its PC hardware division to China's number one computer maker Lenovo.
After days of rumours, the announcement heralds a $1.75bn (£900m) deal which will make the combined operation the third biggest PC vendor in the world.

Lenovo, formerly known as Legend, has been pushing hard to spread its brand on the international stage.

IBM, meanwhile, will be free to focus on its other more lucrative businesses.

Relocation

The sale gives IBM $650m in cash, along with an 18.9% stake in Lenovo worth $600m.

The Chinese firm will also take on about $500m in debt.

Its PC business HQ will relocate from Beijing to upstate New York, where IBM is based, as a result of the deal.

About 10,000 IBM staff will move to the new enterprise - about 2,300 in design, marketing and sales in the US and the rest in manufacturing in China.

Among them is IBM senior vice president Stephen Ward, who will become the firm's chief executive.

The merged firm will have sales of about $12bn a year.

"This acquisition will allow Chinese industry to make significant inroads on its path to globalisation," said Liu Chuanzhi, Lenovo's chairman.

One Lenovo official told the BBC the deal was a dream come true and a matter of national pride.

But the company's position is that it will not be satisfied with its number three position globally.

End of an era?

Tuesday's announcement means IBM is backing out of direct involvement in a market it invented in 1981.

That year, the IBM PC hit the market: the first "personal computer" aimed squarely at businesses which - till then - had seen computers as massive central machines to be tapped into where necessary.

The PC, in contrast, was designed to put processing power on the desktop.

But copycat vendors moved in to sell their own "IBM-compatible" PCs, and the real money in the industry moved to software vendors - and in particular to Microsoft, the upstart company which had persuaded IBM to use its product to control the PC.

IBM, in terms of market power the Microsoft of its day, failed to spot that hardware would become simply a commodity - a problem which has also hit other once-dominant vendors such as Hewlett-Packard.

That shift has helped put Dell, which mastered the art of making PCs on wafer-thin margins, into the driving seat of the PC hardware business.

It also made chipmaker Intel - whose semiconductors were for years the only irreplaceable piece of hardware in a PC - into a multi-billion dollar powerhouse.

Spreading the risk

IBM today is much more focused on business services, chipmaking and selling high-powered servers and storage systems.

In a way, the company has returned to its roots, selling the "big iron" which powers corporate networks.

It has also learnt from its experience of repeatedly getting burnt by Microsoft.

A significant proportion of its efforts now go into systems running Linux, the main open-source competitor to Microsoft's Windows.



http://news.bbc.co.uk/1/hi/business/4077579.stm

[VeriSexy]

Profit margins in PCs are way too low now. Only way to compete is to have them all built in China. Right now IBM holds 18.9% so they are not completely out of the PC market.

[iFliPcEss]

i am no longer surprise since chinese is really good in business

[TzarJorge]

they will rule the world soon...

[sean416]

Originally posted by TzarJorge
they will rule the world soon...

you can say that again

[VeriSexy]

"Lenovo will pay $600 million in cash and $650 million in stock for the new business, the companies announced late yesterday. Lenovo will also take on about 10,000 IBM employees."

Hmm, I bet 2/3 of them will get laid off soon

IBM quits PC manufacturing in £900m deal
By Mike Verdin and Andrew Heavens



IBM has sold its computer making business to Lenovo Group, the Chinese technology company, in a $1.75 billion (£900 million) deal, signalling an exit from the PC market it helped create in the 1980s.

IBM said that the disposal, which will create the world's third-ranking PC manufacturer, would allow it to focus on the technology services market from which it has gained an increasing proportion of its profits.

"We have aggressively positioned IBM to be [a] provider of innovation-led solutions for businesses and institutions," Samuel Palmisano, the IBM chairman and chief executive, said.



When was the last time you saw a successful acquisition or merger in the computer industry?

Michael Dell, founder of Dell Computers, on the IBM sale to Lenovo




"The PC segment of the electronics industry continues to take on characteristics? which favour enormous economies of scale."

Lenovo, whose annual PC sales will quadruple to $12 billion, would fulfil an "unwavering goal" to become "truly nternational enterprise".

Yuanqing Yan, the Lenovo chief executive, said: "The development of the internet brings both great opportunities for the development of the PC industry and significant challenges.

"To succeed, PC companies need to have global scope, leading-edge technology and highly efficient operations."



Lenovo, which was founded 20 years ago by academics as a distributor of computer equipment, and which first operated out of a cottage, has grown into Asia's biggest computer maker, with a 27 per cent share of the Chinese market. The company gained a Hong Kong listing ten years ago.

However, even after today's acquisition, which will allow Lenovo to use the IBM brand, the company will claim only a 7.7 per cent share of the global PC market. Dell leads the market with a 16.7 per cent share with Hewlett-Packard claiming 15 per cent after the merger with Compaq, then the world leader, two years ago.

Dell yesterday signaled that it was ready to take advantage of any gap left by IBM's exit.

Before the deal was formerly announced, Michael Dell, the company's chairman and founder, used a speech at a conference in San Francisco to pour scorn on the prospects of any new company that might emerge from an IBM sale.

"We're not big fans of the idea of taking companies and smashing them together," Mr Dell said. "When was the last time you saw a successful acquisition or merger in the computer industry?

"It hasn't happened in a long, long time...I don't see this one as being all that different."

"If you look over the last few years, there has been a continuing trend of not only declines in market share but de-emphasis and divestiture of various assets of the small computer system business at IBM. It's pretty clear this is not the long-term strategic priority for IBM," he added.

"In our case, it's a different story. Last week, in stark contrast, we announced a brand-new computer manufacturing plant in North Carolina to support our growth in the US."

Lenovo will pay $600 million in cash and $650 million in stock for the new business, the companies announced late yesterday. Lenovo will also take on about 10,000 IBM employees.

IBM will take 18.9 percent equity stake in Lenovo in the deal which is expected to be completed in the second quarter of 2005.

http://business.timesonline.co.uk/ar...393706,00.html

[Theo]

a buddy made a deal last week for 1.5mil blank cds from a chinese factory,it went like 4cents/ blank cd

no european factory could meet this price.

[VeriSexy]

Originally posted by Soul_Rebel
a buddy made a deal last week for 1.5mil blank cds from a chinese factory,it went like 4cents/ blank cd

no european factory could meet this price.

4 Cents each? The plastic alone should be worth more than that. What about cost of machines? Those are not cheap.........

[Theo]

I freaked too, of course i'm not familiar with the area, but it sounded extremely low to me as well. I don't know if it includes the plastic cases or not. He told me that the 2nd best offer was 1 cent more (which in this case is 20% difference); needless to say the chinese do further steps to get your business. He does volume transactions of hitech materieal and equipment and never had problems with china. Let me be the 3rd to say


they will rule the world soon...

[Manowar]

Originally posted by TzarJorge
they will rule the world soon...

[nofx]

Originally posted by VeriSexy
4 Cents each? The plastic alone should be worth more than that. What about cost of machines? Those are not cheap.........

$60k for 1.5mil cd's dont seem like too bad of a deal

sell them for only .06 back to someone and make $30k in just profit ;]

[AdultNex]

Artist: Jin
Song: Learn Chinese

Lyrics :

Yeah, I'm Chinese and what?
Yeah, you know who this is, Jin
Let me tell you this
The days of the pork fried rice and the chicken wings
coming to your house five years is over

[Chorus]
Ya'll gonna learn Chinese
Ya'll gonna learn Chinese
Ya'll gonna learn Chinese
When the pumps come out, ya'll gon' speak Chinese

Ya'll gonna learn Chinese
Ya'll gonna wanna be Chinese
Ya'll gonna learn Chinese
When the pumps go off, ya'll gon' speak Chinese

[Jin]
Go fuck with your head man
I know a bunch of crypts that love Redman
Blood book in New York man things done change
Stop, the chinks be all over the game
This ain't Bruce Lee, I watch too much TV
This is a game of death when I aim for your chest
Too much sex got me seeing slow motion
Eyes barely open with a roach roasting'
And your girl, she loves the gin ocean
Rub it on her body like body shop lotion
What's the commotion, you never seen me?
The original chinky eye emcee
You don't want to step to the army
And Double-R rank refugee
And the battle of the gun is gonna make you speak
another language
And amigo I ain't talking about Spanish

[Chorus]

[Jin]
This one goes out to those that order four chicken wings
And pork fried rice and throw dice
In the hood, you think this is all good?
Till the cowboys roam through like Clint Eastwood
I wish you would come to Chinatown
Get lost in town, end up in the lost in found
Eyewitnesses, you must be crazy
We don't speak English, we speak Chinese
And the only po-po we know is the pigs on the hood out in the window
Every time they harass me, I wanna explode
We should ride the train for free, we built the railroads
I ain't ya 50 Cent, I ain't ya Enimem
I ain't ya Jigga Man, I'm a chinaman
Ginseng in the palm of my hand
She looks suprirsed in the palm of my hands
You know what's next? Safe sex
I'll be damned if I sleep in the flesh with the insect

[Hook]

(Woman singing)
(Jin speaking Chinese: This one sounds good. Let's give her a call on the phone.)
Mr. Jin, you are the sexist man
Mr. Jin, I love the way you do your things (Jin speaking Chinese: Really?)
Mr. Jin, you are the sexist man
Mr. Jin, I love the way you do your things

[Jin]
The moral of the story is
Don't judge a book by its cover
I know you think he's fam, but he's really undercover
I saw his name on the affidavit
It was written in Chinese and this is what he said:
(Jin Speaking Chinese: The chinese restaurant is closing soon)
Bring about some local hooligans and thugs so
Catch them at midnight when they close the shop up
Reading the Ten Commandments, cooking up heckka
Movie small posters are all over the walls
If they think you'd save me the bullet, it's so over ya'll
Me, I'm just Jin just doing my thang
Just doing my thang, just doing my thang
Why is there beef everywhere I go?
I'm drunk skewing, can't we all get along
My ladies with the thongs, my thugs with the firearms

Ya'll gonna learn Chinese (Wyclef: all the ghetto)
Ya'll gonna learn Chinese (Wyclef: all the suburb)
Ya'll gonna learn Chinese
When the pumps come out, ya'll gon' speak Chinese.
(Wyclef: Refugees)

Ya'll gonna learn Chinese (Jin speaking Chinese: di lo)
Ya'll gonna learn Chinese (Jin speaking Chinese: Hurry, get out of here)
Ya'll gonna learn Chinese
When the pumps come out, ya'll gon' speak Chinese

(Woman singing)

[Hook]

[Wyclef]
The game will never be the same (Jin speaking Chinese:
I already played the game)
Double-R refugees (Jin speaking Chinese: Let's go home)
First Chinese rapper
First page rapper
Refugees
(Jin speaking Chinese: Chinatown)
(Jin speaking Chinese: I already played the game)
(Jin speaking Chinese: That's it)