IBM Server Business Sale to Lenovo a Win-Win

When Lenovo (LNVGY) made the decision to purchase IBM’s (IBM) x86 server business, it goes without saying it was expecting a big return.

According to IDCibm stock, a big return is exactly what Lenovo is getting. With its acquisition, the company is now the biggest x86 server provider in China. Furthermore, the research firm believes this will strengthen the company’s products and channels moving forward.

In terms of server market share by shipments during the first half of the year, Lenovo is leading in China with 23.9% market share. It is followed closely by Dell at 20.36%.

When you look at the worldwide market, Lenovo might not be at the top, but with the help of its IBM acquisition, it is better positioned to compete with the leaders. Hewlett-Packard (HPQ) has the worldwide lead, followed by direct ODM sales and Dell. Lenovo checks in with 11.65% of worldwide x86 server market share.

Lenovo and IBM: Good Partners

This is not the first time IBM and Lenovo have done business together. Furthermore, it is not the first time Lenovo is using an IBM acquisition to grow its share in a key market:

“IDC notes that Lenovo’s previous acquisition of IBM PC business in 2005 and the subsequent nine years of operation has made it the industry leader in the global PC market.”

This is a win-win for both companies. Lenovo has the opportunity to strengthen its market share, while IBM is able to unload a part of its business that it is no longer interested in.

Not to mention that IBM is making out big time with a payout of roughly $1.8 billion in cash, as well as $280 million in Lenovo stock.

As of Oct. 1, Lenovo had completed the initial closing of this acquisition.

As of this writing, Chris Bibey did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

©2022 InvestorPlace Media, LLC