IBM's PC Division: No Profit in More Than 3 Years

[neufuse Veteran]

In a regulatory filing with the US Security and Exchange Commission

(SEC), IBM revealed that its PC business, which the company recently

sold to Chinese computer giant Lenovo Group for $1.25 billion, hasn't

been profitable for at least 3 and a half years. The revelation, which

IBM wouldn't have made were it not legally required to complete the

sale, was unusually blunt about the economics of the PC business.

"The [PC] business has a history of recurring loses, negative

working capital, and an accumulated deficit," IBM said in the filing.

"The ability to settle obligations as they come due is dependent on

IBM funding the operations on an ongoing basis." The business lost

$258 million in 2003, $171 million in 2002, and $397 million in 2001.

In the first half of 2004, IBM's PC business lost $139 million on

sales of $5.2 billion.

In recent years, IBM has divested itself of some of the less

profitable parts of the PC-making process, selling off almost all its

manufacturing operations in 2002 and 2003 (the company still maintains

a manufacturing center in China). Since then, IBM has outsourced the

manufacturing of most of its PCs, although its North Carolina-based

offices were still responsible for designing the machines, which

include the popular ThinkPad line of notebooks. This situation is in

keeping with the original goals of IBM's first PC: The company

outsourced the microprocessor to Intel and the OS to Microsoft and

other companies; those decisions led to the PC industry we know today.

Thanks to cutthroat competition, the only large PC maker that turns

a profit on its PC business today is Dell. Although IBM's sale to

Lenovo will create a larger number-three PC maker (behind Dell and

HP), whether that new company will be able to return to profitability

is still unclear.

[Vice]

yup, and heres the sad thing, lenovo are keeping the IBM bosses to run it for them lmao

[Narlzac85]

it saddens me everytime I see another Dell. Its taken over the entire country, everyone has a dell and its ****ing me off. Losing IBM as a choice of companies leaves only Dell and HP, and I would probably pick Dell myself if I have to get a laptop, otherwise I will keep on building my own stuff

*edit: So lenovo is going to keep selling the IBM computers? Hopefully they don't change a thing

[threetonesun]

Oddly, I think the Dell HP battle will be good for, of all people, Apple. Neither Dell or HP make very interesting PCs, HP has already aligned with Apple in some form, Apple is making cheaper PCs ... it could become a legitimate force, especially since both Dell and HP are known for cost cutting in the customer service departments, and personal experience has led me to believe Dell's low end laptops are built by trained monkeys.

[Deanjl]

If I remember correctly, Apple is also the other big PC manufacturer to maintain a profit. But in that article obviously talking about Windows-based PCs. Can we have a source for that article?

[threetonesun]

If I remember correctly, Apple is also the other big PC manufacturer to maintain a profit. But in that article obviously talking about Windows-based PCs. Can we have a source for that article?

585223623[/snapback]

True, but given the fact that Wallmart has started selling Linux PCs, I think there might be a real trend away from the OS and towards the bottom line price.

[neufuse Veteran]

the one thing I don't get is how they didn't profit... they had the most overpriced laptops I've seen spec wise, you'd of thought with the popularity of thinkpads and their price they'd of made money

[noyb]

True, but given the fact that Wallmart has started selling Linux PCs, I think there might be a real trend away from the OS and towards the bottom line price.

585223663[/snapback]

I would say in my opinion that that is the case at the moment and not the OS and also the reason why IBM had to give up its PC business and im sure won't be the last company to do so. Consumers and Corp's wanting cheaper and cheaper PC's have forced all PC companies to operate at Wallmart margins because thats the demand that consumers have put on them, Apple has managed to keep its profit margins on systems healthy because they are honest about their prices despite every 8 year old on this site saying that they are overpriced.

China is about the only country left where this industry can still blossom decent profits because they have the incredible demand coupled with low labour costs, not to mention most components of a PC are made in their area of control or influence, the best thing for the west to do is to keep them interested in our software.

[b mitchell]

it saddens me everytime I see another Dell. Its taken over the entire country, everyone has a dell and its ****ing me off. Losing IBM as a choice of companies leaves only Dell and HP, and I would probably pick Dell myself if I have to get a laptop, otherwise I will keep on building my own stuff

*edit: So lenovo is going to keep selling the IBM computers? Hopefully they don't change a thing

585223567[/snapback]

Why do Dells **** you off? They are great products at cheap prices. Dont be blind. IBM didn't innovate like the rest, and they are paying.

[threetonesun]

Why do Dells **** you off? They are great products at cheap prices. Dont be blind. IBM didn't innovate like the rest, and they are paying.

585226756[/snapback]

Dells are hardly great PCs. You can buy every cheap component they put in them for less, and get a better case. I've seen way to many of their laptops fall apart while still under warranty, and their customer support is attrocious. IBM made good laptops for a long time, but got pushed out because Dell did a better job of whoring their way into corporations.

[Slimy]

not surprised, dell own3d them

dell's are great for those that CANNOT for any reason, build their own computer