Hot stocks to watch this afternoon: GPRO, HAS, MU >>> READ MORE

IBM Stock – IBM to Sell Server Unit to Lenovo for $2.3B

IBM stock not budging with the news


IBM (IBM) is selling a part of its server business to Lenovo (LNVGY) for $2.3 billion, in what the Wall Street Journal is reporting to be the biggest-ever overseas tech acquisition by a Chinese company.

ibm-stock-IBMIBM stock is down slightly in pre-market trading.

“This will give us a good foundation for the next 10 years,” Lenovo Chief Executive Yang Yuanqing told the WSJ. “The PC market is maturing and becoming more saturated.”

 Lenovo’s deal with IBM comes amid a sea change in the PC industry. Lenovo last year overtook Hewlett-Packard Co.( HPQ) as the market leader in PCs by shipments. But demand for desktop and laptop PCs is weak as consumers and businesses spend more money on mobile devices. World-wide PC shipments fell 10% last year, the worst-ever sales slump for the industry, according to research firms Gartner and IDC.

For IBM, the sale of the server unit would help it focus on more profitable areas such as software and services, while scaling back on low-margin hardware businesses. In IBM’s latest earnings report Tuesday, weak results at its hardware operations contributed to the sharpest decline in the company’s quarterly revenue in more than four years.

Lenovo bought into IBM’s personal-computer business nearly 10 years ago, which has since helped the company become the world’s largest PC maker.

According to IBM, the sale includes System x, BladeCenter and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers and associated software, blade networking and maintenance operations.

Of the purchase price, some $2 billion will be paid in cash and the balance in Lenovo stock.

IBM stock is down 6% in the past 12 months.

Article printed from InvestorPlace Media,

©2017 InvestorPlace Media, LLC