http://news.yahoo.com/news?
tmpl=story&u=/ap/20041208/ap_on_bi_ge/ibm_pc_business

IBM Selling PC Unit to China's Lenovo

NEW YORK - International Business Machines Corp. is selling a majority
stake in its pioneering personal computer business to China's biggest
computer maker, Lenovo Group Ltd., for $1.75 billion in cash and stock.

The widely expected deal, one of the biggest Chinese overseas acquisitions
ever, would make Lenovo the third-largest PC company in the world. IBM
currently holds that spot.

The sale extends IBM's long-running transition from leader and innovator in
computer hardware to a dominant force in computer services, software and
consulting.

About 9,500 IBM workers will become employees of the new company, doubling
Lenovo's work force.

The stock IBM is receiving will give it an 18.9 percent stake in the merged
company, which will have an estimated 8 percent share of the worldwide PC
market. The combined PC revenue for the two companies in 2003 was $12
billion.

Like other major Chinese manufacturers hoping to expand overseas, Lenovo is
planning to leverage a well-known foreign brand name.

The deal will give Lenovo ownership of two well-respected IBM brands: the
ThinkPad laptop name and the ThinkCentre desktop name. Lenova will be able
to continue using the IBM name in front of those two brands for up to five
years. The eventual plan is to sell the machines as Lenovo ThinkPads and
Lenovo ThinkCentres.

Stephen M. Ward, Jr., currently IBM senior vice president and general
manager of IBM's Personal Systems Group, will serve as the chief executive
officer of Lenovo following completion of the transaction. Yuanqing Yang,
currently vice chairman, president and chief executive officer of Lenovo,
will serve as the chairman of Lenovo after the transaction.

IBM executives sought to reassure jittery investors, customers and
employees, emphasizing the company's focus on continuity.

"The IBM brand will gain great recognition in China, the world's fastest
growing economy and the world's fastest growing market for PCs," said John
Joyce, IBM senior vice president and group executive of IBM Global
Services.

"For employees, this represents an opportunity to join a vibrant and
growing company, and for investors this agreement represents an opportunity
to reap the rewards of a growing company in a growing market," he said.

Lenovo is China's biggest computer maker, claiming a 27 percent market
share, as well as the biggest in Asia. Its shares are traded in Hong Kong.

The announcement Wednesday followed numerous reports a deal was imminent.

"The bigger the baby, the more difficult the delivery," Lenovo's chairman
Liu Chuanzhihe quipped when asked about the delay in making a formal
announcement.

With speculation about the impending deal mounting Tuesday, IBM's stock
fell $1.57 per share to $96.10 in trading on the New York Stock Exchange.
Shares rose 10 cents in after-hours trading, to $96.20.

The companies expect that by combining operations, they'll be able to save
money on manufacturing and expand their razor-thin profit margins despite
intense pricing pressures. Lenovo also hopes the IBM brand and the
company's vast corporate client base will bolster its sagging fortunes.

IBM designs its ThinkPad laptops and ThinkCentre desktops, but no longer
manufactures them at any plants it owns alone. Instead, all its PCs are
either produced through joint ventures or outsourced to other
manufacturers.

Globally, IBM sold 6.8 million PCs in the first nine months of 2004 for a 5
percent market share, research firm Gartner Inc. said. That compares with
16.4 percent for Dell Inc. and 13.9 percent for Hewlett-Packard Inc., which
makes both the HP and Compaq brands.

Both IBM and Lenovo have been grappling with the difficulties of turning a
profit on PCs, a business that has suffered steep price declines over the
past decade thanks to aggressive competition from Dell and upstarts such as
eMachines Inc., which was acquired earlier this year by Gateway Inc.

Where an entry-level desktop computer once rarely sold for less than a
thousand dollars, consumers can now find powerful, name-brand machines with
a wide array of the latest bells and whistles for less than $500, including
the monitor.

As a result, despite frequent accolades for many of its ThinkPad laptops,
IBM has been shifting focus away from the PC business for years,
emphasizing more profitable operations such as technology consulting,
systems management, software and outsourcing.

Lenovo, founded in 1984 and formerly known as Legend, currently holds a 2
percent share of the PC market, according to Gartner.

But while Lenovo also has moved to lessen its dependence on PC's by
expanding into cell phone manufacturing and information technology
services, the company had said more recently it wants to focus on its core
computer business again.

IBM, based in Armonk, N.Y., has nearly 320,000 employees.

___


On Tue, 7 Dec 2004 16:18:50 -0500, Michael Baier
<[log in to unmask]> wrote:

>http://money.cnn.com/2004/12/07/technology/hp/index.htm?cnn=yes
>
>Fiorina: HP talked about splitting up
>
>Company discussed breakup scenarios three times but has no current plans to
>revisit the idea.
>December 7, 2004: 3:08 PM EST
>
>NEW YORK (CNN/Money) - Hewlett-Packard CEO Carly Fiorina said Tuesday the
>company had seriously considered breaking up on three separate occasions
>but each time decided against it.
>
>An HP spokesman said Fiorina made the remarks during the company's analyst
>meeting in Boston. Fiorina did not give a time frame on when the
>discussions took place, the spokesman said, adding that the company has no
>current plans to revisit the talks.
>
>Fiorina's remarks did little for the stock Tuesday. Shares of HP
>(Research), a Dow component, edged lower in afternoon trading.
>
>Several analysts have called for HP to break up into two companies
>following its merger with Compaq in 2002.
>
>Most recently, Merrill Lynch analyst Steve Milunovich suggested in a report
>in June that HP should either spin off its lucrative printing and imaging
>business into a separate company or split HP into two firms, one focusing
>on consumers and the other on corporations.
>
>The HP break-up news comes as one of HP's top competitors, IBM, is looking
>to scale back in the PC business. According to published reports, IBM is
>seeking to sell the majority of its PC division to Chinese PC maker Lenovo
>Group.
>
>HP, like IBM, has struggled in recent years to make a profit from selling
>PCs due to intense competition from industry leader Dell and other
>suppliers.
>
>Dell and HP have been fighting for the top spot in global PC market share
>since HP completed its merger with Compaq. But Dell has been far more
>profitable in the PC business.
>
>But HP still makes the vast majority of its money from its cash cow
>printing business and has also made inroads in more profitable tech
>services of late. So some analysts have expressed hope that HP would focus
>more on these divisions.
>
>HP has also been trying to sell more storage devices, servers and software
>to large corporate customers and the company has cited some improvement in
>its so-called enterprise business lately. Fiorina said during the company's
>fiscal fourth quarter conference call last month that the business was
>strengthening heading into the end of the year.
>
>As such, calls for a break-up of the company have died down a bit lately.
>Since HP posted better-than-expected fourth quarter results in November,
>the stock is up nearly 10 percent.
>
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