Official : IBM Sells PC Business

After speculation last week, it's become clear that IBM has sold its PC business to the Chinese company, Lenovo. In a deal worth $1.75bn, Lenovo will take buy IBM's PC unit and its debts. As part of the deal, IBM will maintain an 18.9% stake in the company. Lenovo will be the preferred PC supplier to IBM, and will also be allowed to use the IBM brand (e.g. "Think") for the next five years.

Post purchase, Lenovo will be selling ~11.9 million units per year, making it one of the top ten PC makers worldwide. Lenovo, previously known as Legend, was formed in 1984 and has since become the largest PC maker in China. After a failed attempted at entry into foreign markets in 2002, the purchase will allow the company to expand out of China, and conversely allows IBM further entry into Asian markets.

Although IBM sees several billion dollars revenue from its PC business each year, it makes very little profit. The move highlights IBM's shift towards services and software, as well as providing high end (and high profit) computer systems like servers. IBM is one of the longest players in the PC market; the company founded the "Personal Computer" in the 80's, and its departure from the market highlights the changing times that PC makers are facing.

View: IBM | Lenovo

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