IBM Sells PC Unit to China's Lenovo [$1.25 billion deal]

Reuters ^ | Dec 7, 2004

[Cicero]

Naturally China has samples of all our commercial computer products already. But they don't have IBM-type expertise, necessarily. I'd be more worried about the knowledge transfers than the hardware as such.

[baseball_fan]

I would like to know who these guys are and did this force IBM's hand:

http://www.walmart.com/catalog/product.gsp?product_id=3163026

[Ernest_at_the_Beach]

AMD Athlon 4 processor

Now that is new to me..... must be their name for the AMD Semptron......likely made in China...or Taiwan and may be running Xandros Linux as opposed to Windows.....

[baseball_fan]

specs show Microsoft Windows XP Home Edition

[Ernest_at_the_Beach]

Here is another one................

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Microtel PC With 1.5 GHz AMD Sempron 2200+ Processor, SYSWM4005
$199.98	_____________________________ The microtel machine runs Linux................

[Cicero]

Cheap computers have always been available at Costco, Walmart, and other outlets. I doubt that this will be going head-to-head with IBM, which is a pretty fancy expensive machine. Their chief competitor is probably Dell, which also sells a lot to corporations. HP threatened IBM for a while but has pretty well wrecked its reputation. Same with Gateway.

I use all Dells. IMHO IBM just doesn't offer that much more for their higher prices.

[philetus]

Pretty soon all PC's will run backwards.

[general_re]

Athlon 4 is a mobile version of the chip - it's a real chip, albeit not exactly top of the line. Of course, the people who bought that thing back in September/October thought they were buying an Athlon XP. ;)

I googled up Balance laptops - turns out they're rebadged ECS ("Elitegroup Computer Systems", a Taiwanese outfit) machines. I also found that some folks who bought them a few months ago weren't very happy about their purchases, hence my comment above - it was originally advertised as an Athlon XP, which it turns out not to be. Plus, whoever rebadged them for Wal Mart also flashed in a modified BIOS that lied about the processor speed - people who thought they were getting an Athlon 1800+ were actually getting a 1600+, and people who thought they were getting a 1600+ were getting 1400+. Anyway, Wal Mart has supposedly corrected the problem now, hence the correct "Athlon 4" label on their website.

[paulat]

Bill Clinton is supporting China's new search engine....

[Ernest_at_the_Beach]

Very interesting!

[general_re]

File it under "you get what you pay for" ;)

In any case, it appears that the problem was with the company that rebranded them, not the manufacturer or with Wal Mart - by all accounts, Wally World was pretty good about aggressively investigating complaints, and some sort of deal to compensate purchasers is apparently in the works.

[baseball_fan]

If General Motors, by way of analogy, said they were no longer going to produce cars (sell manufacturing those products instead to a Chinese firm) and would concentrate only on making SUVs, trucks and vans, it would seem only a matter of time until the high volume car economics by this new competitor outflanked the rest of their line.

IBM has also sold their disk drive storage business. This cannot create confidence longer term, I wouldn't think, in their other manufacturing prowess. If one gives up all manufacturing, don't you lose the insights that come from that which provide the basis to sell consulting services to begin with?

I think GM now gets over half their revenue from financing rather than manufacturing. IBM is well over half of revenues in their services. We are back to such large scale demographic transformations as happened early in the 20th century when people moved off the farm into other occupations, only now it is out of manufacturing into ?? I suppose. Yet we only recently became a net importer of food in our country's history! Is the current account balance telling us anything?

[oceanview]

the montly jobs figures tell you the story - service jobs, health care, education, government, food service, travel and leisure, retail - those are the growth areas. tech, white collar, manufacturing - are all in decline.

americans parents are piling their kids into law schools.

[general_re]

If one gives up all manufacturing, don't you lose the insights that come from that which provide the basis to sell consulting services to begin with?

Not really. EDS has never made a single computer, and yet they seem to be doing okay.

We are back to such large scale demographic transformations as happened early in the 20th century when people moved off the farm into other occupations, only now it is out of manufacturing into ??

...services. And it's already a done deal - 80% of this country's GDP came from the service sector last year.

Yet we only recently became a net importer of food in our country's history!

Actually, it'll be close to net zero, imports versus exports. Staples are still major exports, but we import lots of exotica from other places - wine, cheese, ethnic foodstuffs, et cetera. It's not such a bad deal.

Is the current account balance telling us anything?

Foreigners want to sell us things, and we want to buy them? Or were you looking for something deeper? ;)

[baseball_fan]

Worse case scenario: At the end of the day it would seem China ends up with a huge amount of dollar bills (treasury notes) and excess capacity, and we end up with a lot of consumer goods and excess debt. To spend those dollars the Chinese would then turn to buying American productive capacity (farmland, R&D research, manufacturing capability, other American companies) while directing their excess capacity to new found internal demand. We are left in debt and without owning our productive capacity - a colony. Hopefully I'm missing something here so there is a happy ending.

[FreedomPoster]

I don't know, but I do expect that XP would run like crap on a system with 128M of RAM.

[snowsislander]

Worse case scenario: At the end of the day it would seem China ends up with a huge amount of dollar bills (treasury notes) and excess capacity, and we end up with a lot of consumer goods and excess debt. To spend those dollars the Chinese would then turn to buying American productive capacity (farmland, R&D research, manufacturing capability, other American companies) while directing their excess capacity to new found internal demand. We are left in debt and without owning our productive capacity - a colony. Hopefully I'm missing something here so there is a happy ending.

No, that's what happens to major debtor nations, especially those that have no laws to prevent such -- many countries I believe still have plenty of laws to limit foreign ownership.

In our case, this has clearly been happening; just last night I was looking at the BEA's report "Operations of U.S. Affiliates of Foreign Companies" for 2002.

Some depressing figures. Depending on how you define foreign-owned, foreigners' FDI assets in the non-financial area were somewhere between $4.5 and $5.5 trillion. For the financial area, there was another $2.2 trillion of assets held. 5.9 million Americans worked in 2002 for these companies; that's down from a high of 6.5 million in 2000. (I also was reading Japan's FDI report which includes more recent data, and much of Japan's reduction of U.S. employees is to hire people in China.)

Along with $1.7 trillion in government debt, that's a lot of ownership in my opinion.

For comparison, the capitalization of all U.S. companies in all of the major world markets is $33.6 trillion. U.S. companies on the New York Stock Exchange are at about $11.7 trillion in capitalization; NASDAQ and Tokyo each are at $3.2 billion:

	Market Capitalization (trillions)		10/31/2004	10/31/2003	12/31/2003
	Domestic Listed Companies (excluding closed-end funds - official WFE figures)		$33.6	$28.6	$31.3
	of which:	NYSE	$11.7	$10.8	$11.3
		Nasdaq	$3.2	$2.9	$2.8
		Tokyo Stock Exchange	$3.2	$2.3	$3.0
		London Stock Exchange	$2.6	$2.2	$2.4
		Euronext	$2.2	$1.9	$2.1
		Deutsche Borse	$1.0	$0.9	$1.0
		AMEX	$0.09	$0.08	$0.08

You might also take a look at the Federal Reserve's publications on assets owned by U.S. households to get other numbers to compare the foreign FDI figures.