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NewswireToday - /newswire/ -
Ahmedabad, Gujarat, India, 03/19/2006 - LENOVO™ Group, Chinese computer maker told it will take over personal computer business from IBM..
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With that it will create international third biggest PC maker with 1.75 billion dollar deal with announcement of China’s ambitions to become a significant player in the industry of world. The deal is one of the largest foreign acquisitions ever from a Chinese organization and is expected to quadruple sales of Lenovo Company, which is already biggest computer maker of Asia, the sources said.
With that it is going to expand IBM’s long running transition of leader, innovator in computer hardware with a dominant force in services of computer, software, IT and consulting. It was formerly known as Legend, it joins a wave of Chinese organization with aggressive plans to expand overseas. With the acquisition, it will allow Chinese industry to make valuable ways and paths to globalization; it has certainly changed the international PC business manufacturing structure of the China.
It will take over desktop PC business of IBM, including research & development and manufacturing for 1.25 billion dollar in cash, shares, and IBM Company will retain 18.9 % stake. The company has also agreed to take on liabilities that rose from the total value of the deal with IBM by 1.75 billion dollar. The organizations will be allowed to use the brand name of IBM under some licensing agreement as well.
So now IBM focuses on software consulting and, Offshore Outsourcing much of its manufacturing. Wit the sale to Lenovo it was expected to cut some production costs and breathe new life into the Personal Computer business that accounts by small portion of total sales or profits of IBM. The brand name of IBM will definitely gain great recognition in country like China, the fastest growing economy of the world and the fastest growing market for Personal Computers world-wide, Beijing-based Company has more than 26 % of China’s share for computer market and the shares are traded in Hong Kong.
The company will require branching out by services and other segments as profit margins for manufacturing shrink, it is really difficult but they are certainly not shying away of any challenges. IBM had 5 %f the worldwide PC market in year 2004, selling 6.8 million units, according to Gartner Inc., a American technology consulting organization. With comparing to more than 16 percent for Dell Inc. and more than 13 % for Hewlett-Packard Inc., which makes further the HP and Compaq brands.
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