Posted on 12/07/2004 6:32:06 PM PST by Tumbleweed_Connection
China's biggest computer maker, Lenovo Group, said Wednesday it has acquired a majority stake in International Business Machines Corp.'s personal computer business for $1.25 billion, one of the biggest Chinese overseas acquisitions ever.
The deal shifts IBM to a peripheral role in a corner of the technology industry it pioneered.
It creates a joint venture in which Lenovo Group Ltd. takes over the IBM-brand personal computer business, including research and development and manufacturing, while IBM will keep an 18.5 percent stake in the company, said Lenovo's chairman, Liu Chuanzhi.
The deal makes Lenovo the third-largest PC company in the world, he said.
Like other major Chinese manufacturers hoping to expand overseas, Lenovo is planning to leverage a well-known foreign brand name. Liu said the company would be entitled to freely use IBM's brand name in five years' time.
IBM's computer unit had sales of nearly $13 billion over 12 months ended in September.
Lenovo, founded in 1984 by a group of scholars at the government-backed Chinese Academy of Sciences in Beijing, is China's biggest computer maker and is also the biggest in Asia. Its shares are traded in Hong Kong.
The announcement Wednesday followed reports that a deal was imminent. On Tuesday, Lenovo's Hong Kong unit confirmed it was in talks with a "major international company in the information technology business" but hadn't named the company, saying the negotiations were confidential.
"The bigger the baby, the more difficult the delivery," Liu quipped when asked about the delay in making a formal announcement.
With speculation about the impending deal mounting, IBM's stock fell $1.57 per share to $96.10 in Tuesday's trading on the New York Stock Exchange.
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.
Once a key player in popularizing the personal computer, IBM is now increasing its focus on consulting, outsourcing and software, analysts say.
Its PC business now accounts for a small portion of its total sales and profits, according to analysts. It ranks a distant third in terms of PC units sold, having surrendered the market lead by the late 1990s, according to the technology research firm Gartner Inc.
Globally, IBM sold 6.8 million PCs in the first nine months of 2004 for a 5 percent market share, Gartner 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.
The companies expect that by combining operations, they'll be able to save money on manufacturing and expand their razor-thin profit margins.
Lenovo faces increased competition at home and in Asia from foreign companies such as Dell. The Beijing-based company, formerly known as Legend, had expanded into cell phone manufacturing and information technology services, with lackluster results. It now says it is focusing on its core computer business again.
IBM was not the first technology company to sell a computer small enough to sit on a desk or table. But it did popularize the idea of a "personal" computer for the mass market with the 1981 introduction of a desktop machine featuring a more user-friendly operating system, a software platform licensed from a then-fledgling company named Microsoft Corp.
IBM, based in Armonk, N.Y., has nearly 320,000 employees.
Chairman Clinton has done wonders for China's development and movement into the 21st century. Beijing should make him man of the year and put his picture on the front page of their national magazine: "Wife." ( We used to buy this magazine years ago in the Estados Unidos.)
Most of this started with the Worthen Bank in Little Rock, Arkancide.
The Gotham Book Mart with its sign "Wise Men Fish Here" was a landmark for years in NYC. Oddly placed in the middle of the diamond district on 47th street. The place has moved, but it's still a landmark. There's a famous picture of TS Eliot and others in the shop. You can probably google it.
Parking on the street is tough around the Met. The garages are gonna cost you a fortune, particularly on a weekend. Better to park downtown or midtown and then taxi or subway up to the museum.
Thanks...Ill forward this info to freinds and family of mine who are big on lterature.
I once saw a fist fight break out there during a heated discussion of Thomas Pynchon. Luckily it was between the types of guys who could have a heated discussion over Thomas Pynchon, so nobody was seriously hurt.
Ah, yes, Worthen Bank.
Owned by Mochtar Riady, an ethnic Chinaman with significant holdings in PRChina, all ready for development--assuming that PRChina could get MFN/PNTR.
Worthen lent Clinton the money he needed to finish the primary race in 1992, and the rest is history.
But it wasn't just Worthen was it? Isn't that Bank now owned by a larger banking conglomerate?
"Luckily it was between the types of guys who could have a heated discussion over Thomas Pynchon, so nobody was seriously hurt.:
lol.....WWF meets the book of the month club.
future MAD tv skit......
GREAT FIND! Although I thought that was the case, as well.
There is no "private" entity in PRChina that has the kind of muscle necessary to cough up $1.2Bn, except the Triads...
BTW, one of the computer rags is running a story indicating that IBM PC's have huge warranty costs (around 7% of net sales, twice that of Dell or HP.)
Surprise!!! All that Chinese junk is still just that: junk, no matter the brand name.
Not for the Thinkpads. Lenovo could clean up in that market, if they can keep the quality up and get the price down.
You mean Chinkpads, as of today.
You just couldn't resist, could you. LOL
www.washingtonpost.com/ac2/wp-dyn?pagename=article&contentId=A57913-2002Mar7¬Found=true
"Pentagon Seeks Curb On Foreign Workers Halting Technical Hires May Have Major Impact," By Carrie Johnson, Washington Post Staff Writer, Friday, March 8, 2002
One body shop manager is quoted thus, "'Employees will understand they're a hot commodity and ask for higher salaries,' Hart said. 'It's going to exacerbate' the already tight market for workers who possess clearances to view secret information."
Glad to see the bodyshop owners are not dismissive of security concerns -- they only worry about how it would have affected their bottom line.
More from the article:
"The proposal could prove counterproductive to government interests, said D.C. immigration lawyer Michael Maggio.
"'They're shooting themselves in the foot,' Maggio said. 'There's just a vast number of non-citizens working for the Department of Defense and other contractors with unique and special skills who will be unable to perform services for the U.S. government.'
"Harris Miller, president of the Information Technology Association of America, said more public discussion is needed to help balance national security and economic concerns." [End excerpt]
There's more about it all at this URL
http://techrepublic.com.com/5102-6297-1051476.html
RE: government set asides
I've worked on California state government projects. They do (used to?) require set asides. Citizens or not, just as long as they weren't white males.
I've also worked on a defense "black" program where there were strict citizenship and clearance requirements. I don't think that there has been any suggestion to open these kinds of projects to non-citizens or even citizens who have any questionable connection whatsoever to foreign nationals.
I don't believe this. I will assert that there are not a "vast number" of non-citizens that have unique and special skills.
What there are are clearly many non-citizens for whom it is economically feasible to work for far less than Americans.
The problem is that for any one company, this race to the bottom is a positive on the bottom line. However, for our country as whole, removing economic viability for our own citizens to work in science and technology is not in our best interest.
I don't know about "black" programs, but I DO know that Clinton's very own Hazel O'Leary had instituted a number of security breaches (she called them "reforms" in the nukes area at Hanford (e.g.) and which then affected security at Los Alamos.
You may want to check with any friends you have at those sites...
That was a long time ago. My last contact was during the Clinton years when I was told that despite DoD cutbacks the black programs were well funded.
Yes, I remember Hazel O'Leary's shenanigans -- something about giving everyone the same badge at highly classified sites to avoid "hurting" the feeeeeeeeeeeeellings of employees.
Won't notice. I don't know anyone who buys IBM computers. They suck.
Precisely.
A very good friend of mine, now deceased (RIP) worked at Hanford and expressed the opinion that Hazel was nuts (in much more graphic language.)
Her ideas were just a reflection of Clinton's: the USA should not be 'superior' to other countries; after all, they have people, too...so who the hell cares about DoD or DoE secrets?
Clinton, however, monetized that opportunity with the ChiComs after they bailed him out in his primary race (see above re Worthen Bank.) I happen to think that Clinton could and should be tried for treason and executed, based on the evidence that is public alone...
HP might be presently in decent shape financially, but they have lost a LOT of engineers when Fiorina made it clear that their positions were not safe. Their old reputation and marketing will keep them going for a while, but the quality of the business line has dropped off. (The home users' Pavilian line has been junky for years.) Even if they remain financially successful, they will have lost that aura of genius that infected even their bad products (some over-engineered laptops come to mind, as well as 100VG and New Wave operating environment).
You know, I had a weird thought recently. I have not googled for facts but it seems to me that China "took off" around 1994. The Chi-coms' new economic plan (NEP) was in place years before that and Western technology and know-how was being transferred as a condition of doing business in China. It continues today, of course. But it seems that it really started to accelerate during the 1990s.
I believe that it is true that we do not recognize Red China as a market economy. I think that that has WTO implications. So there are the Party ideologues trying to manage something that should be managed by the "Invisible Hand." If the ideologues object to the Invisible Hand the Hand gets slapped.
Now I'm reading about all the problems in Red China. The "banks" with a huge percentage of non performing loans, the unrest among the 800 million citizens left out of the special economic zones (200 to 300 million citizens), the estimated 100 million "floating population" of unemployed, the difficulty meeting WTO requirements and maintaining totalitarian Party control of the population (see the book, "The Coming Collapse of China"), and more problems such as being forced to fund Mao-era worthless state/village owned enterprises lest tens of million more join the restless unemployed.
I've read elsewhere that foreign investments keeps it going. Thus the ruse (IMO) of shares in "private" enterprises and the communist "promise" of more than a billion customers in the future. Much of the nine percent GDP growth is phony numbers and make work projects.
Well, the Invisible Hand is about to slap the Commies silly. Again, see the book, "The Coming Collapse of China." I've only read reviews and heard one interview with the author. He was saying five to ten years then, Ka-boom!.
We sank the Soviets with economics, this is a much more complicated "attack" but what if we're stuffing them until they implode?
Clinton could be part of it -- except for those damn nuke missiles. So I'm back to the original thought.
The whole lot of the Clintonistas are traitors. I hope to live long enough to see them arrested, tried, convicted and hanged.
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