IBM Corp. has rekindled its quest to find a buyer for its low-end server business, according to a report.
Rumors surfaced last April that Big Blue was looking to offload its x86 arm as part of an ongoing strategy to focus on higher-margin software and services, with Lenovo fingered as a potential buyer.
According to a report on the Wall Street Journal yesterday, IBM has revived those efforts nine months after advanced discussions with Lenovo broke down over the price. It cited “sources familiar with the matter.”
It is not clear if Lenovo is still in the frame, but newly private competitor Dell Inc. was pinpointed as one contender.
According to Morgan Stanley figures quoted in the story, IBM’s x86 business generated about $4.9 billion of its $15.4 billion revenues in 2014. However, Big Blue has a track record of dumping high-revenue, low-margin hardware products having sold its PC business to Lenovo in 2005, and this would be in a similar vein.
Although IBM has not commented publicly on the rumors, last July IBM chief financial officer Mark Loughridge alluded on an earnings call to a “large divestiture project” that “will not likely close by the end of the year.” Talks with Lenovo are thought to have broken down in May after the Chinese vendor was only willing to stump up $2.5 billion for the business, towards the bottom of IBM’s valuation.
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