Brief: IBM Sells Its Printer Business To Ricoh - InformationWeek

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1/26/2007
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Brief: IBM Sells Its Printer Business To Ricoh

A five-year services contract sweetens the $725 million deal.

IBM is selling its printer manufacturing unit to Japanese copier and imaging company Ricoh for $725 million, subject to regulatory approval. IBM and Ricoh are forming a joint venture called InfoPrint Solutions to manage the operation.

The sale is the latest move by CEO Sam Palmisano to rid IBM of low-margin hardware products. In 2005, IBM sold its PC business to Lenovo Group for $1.75 billion.

IBM's Printing Systems Division booked $1 billion in revenue last year, but sales were off 7% in the first nine months of the year. IBM officials last week said the unit's performance dictated that it was time for it to go. "There comes a time when we realize we can no longer move certain technologies in the direction of sustainable growth," said executive VP Nick Donofrio.

The purchase price is less than the unit's annual sales, implying it may be operating in the red. But Ricoh executives appear confident that they'll have more success than IBM in growing the business, which focuses mostly on building large-format and high-speed digital printers for commercial printing environments.

IBM will provide technology and maintenance services to the joint-venture company under a contract worth $920 million over five years. That's one way to turn expense into revenue.

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