BEIJING (AP) — China’s Lenovo Group is buying IBM’s
server business for $2.3 billion, expanding a product line-up dominated
by PCs, tablets and smartphones.
Lenovo, the world’s biggest
personal computer maker, said Thursday it expects to offer jobs to 7,500
IBM employees as part of its acquisition of the x86 server business.
The
acquisition will accelerate Lenovo’s moves to expand beyond its
traditional PC business, said Peter Hortensius, a senior vice president.
"We
see a transformation coming for our company from just being a PC
company to being a mobile device, PC and enterprise server company,"
said Hortensius in a phone interview. "This provides another strong leg
for that strategy."
Lenovo has its own server business but
Hortensius said it is less than one-fifth the size of the IBM Corp.
unit. He said the acquisition will move Lenovo ahead five years in its
plan to expand in servers, raising its global ranking among suppliers
from No. 6 to No. 3 and increasing its share of global server sales from
2 percent to 14 percent.
Lenovo passed rival Hewlett Packard Co.
as the No. 1 PC maker in the third quarter of last year, a triumph that
was tempered by eroding demand. The company has said it expects mobile
devices to become the bulk of its business in coming years.
Lenovo,
based in Beijing and in Research Triangle Park, North Carolina, has
collaborated with IBM for a number of years. The Chinese company
acquired IBM’s PC unit in 2005 and has since expanded into wireless
products including smartphones and tablets.
IBM, based in Armonk,
New York, will continue to develop Windows and Linux software for the
x86 platform and will provide service to customers for an extended
period after the acquisition, Lenovo said.
The server businesses
should be relatively easy to integrate because they have little overlap
outside China, said Hortensius. He said potential customers range from
offices to server farms for mobile devices.
"This becomes a deal
we can quickly gain advantage from, rather than dealing with integration
issues," he said. "There is a lot of scale, capability and know-how
that we can bring to bear to work with the team from IBM. All of them
are experts in their field."
The two companies also plan to enter
into a strategic relationship. It will include a reseller agreement for
IBM’s Storwize disk storage systems, tape storage systems and certain
cloud, file system, platform computing and system software products.
The
acquisition announced Thursday covers IBM’s System x, BladeCenter and
Flex System blade servers and switches, x86-based Flex integrated
systems, NeXtScale and iDataPlex servers and associated software, blade
networking and maintenance operations, Lenovo said.
It said about $2 billion of the purchase price will be paid in cash, the rest in Lenovo stock.
IBM
will retain its System z mainframes, Power Systems, Storage Systems,
Power-based Flex servers, and PureApplication and PureData appliances.
In
its latest financial report, Lenovo said profit rose 36 percent from a
year earlier to $220 million in the three months ended Sept. 30. Sales
rose 13 percent to $9.8 billion.
The results highlighted the shift
to mobile: Lenovo said quarterly sales of smartphones and tablets
soared 106 percent over a year earlier while those of traditional
desktop PCs fell 3 percent.
___
Lenovo Group: www.lenovo.com
Copyright 2014 The Associated Press. All rights
reserved. This material may not be published, broadcast, rewritten or
redistributed.