Report: IBM’s PC business up for sale

IBM Corp. has put its PC business up for sale, according to a story published on Friday on the Web site of The New York Times.

IBM is discussing selling the business to Lenovo Group Ltd., China’s largest maker of personal computers, and at least one other potential buyer, according to the article. The price of the sale and the status of the negotiations were not mentioned.

A spokeswoman for IBM in Japan declined comment on the story and a spokeswoman for Lenovo in Hong Kong had no immediate comment.

IBM’s personal systems group, which include its PC business, has shown strong year-on-year sales growth for each of the first three quarters of this year, according to the company.

Revenues increased 17 per cent compared to the three-month period a year ago to US$3.3 billion on strong sales of mobile PCs during the third quarter, the company said in October. Similarly, strong sales of mobile PCs contributed to 16 per cent year-on-year growth for the second quarter and 18 per cent year-on-year growth for the first quarter, the company said previously.

Market research company IDC said in September that IBM was the world’s number-three PC maker in the second quarter of this year with global shipments of 3.2 million PCs. This was about 16 per cent higher than the second quarter of 2003. However, IBM saw a smaller increase in sales than market-leader Dell Inc. and number-two maker Hewlett-Packard Co.

In a Nov. 29 report, Gartner Inc. predicted that three of the world’s top 10 PC vendors would sell their businesses or pull out of the market by 2007 because of slower growth rates and reduced profit margins.

PC sales per unit may grow by an average 5.7 per cent annually from 2006 through 2008, which is about half the 11.3 per cent average growth likely between 2003 and 2005, according to the company’s predictions. PC revenue growth is also likely to fall to average 2 per cent annually from 2006 through 2008, which is less than half the 4.7 per cent average expected between 2003 and 2005, Gartner said.

Of the top 10 global PC vendors, only Dell Inc. has consistently been profitable in the past several years, and IBM’s PC division was seen as vulnerable to being spun off, the report said.