IBM Reveals PC Operation Was Unprofitable For Three Years - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Hardware & Infrastructure

IBM Reveals PC Operation Was Unprofitable For Three Years

A Securities and Exchange Commission regulatory filing by IBM revealed that the firm continued to lose money in its PC operation in the past three years.

A Securities and Exchange regulatory filing by IBM revealed that the firm continued to lose money in its PC operation in the past three years, and that the losses continued even after the firm had outsourced most of its PC manufacturing in 2002.

In the filing Thursday, IBM said its personal computer business lost $258 million in 2003, $171 million in 2002 and $397 million in 2001. In the first six months of 2004, IBM lost $139 million in the unit, which had sales of $5.2 billion. IBM is selling most of the PC unit to China's Lenovo Group.

"The business has a history of recurring loses, negative working capital, and an accumulated deficit," IBM said in the filing. "The ability to settle obligations as they come due is dependent on IBM funding the operations on an ongoing basis." IBM noted that it sold most of its North American and European PC manufacturing operations to Sanmina-SCI in 2002, and followed up by selling Sanmina-SCI additional assets in 2003.

The sales to Sanmina-SCI came after years of losses in the IBM PC unit. IBM is Sanmina-SCI's largest customer, which, in addition to manufacturing PC gear, also makes server and storage equipment for IBM. Sanmina-SCI also does business with Lenovo, prompting Wall Street stock analysts to maintain they don't see the IBM-Lenovo deal as being negative for Sanmina-SCI.

IBM also has a PC manufacturing operation in Shenzhen, China, with Great Wall Technology.

From its earliest days in the late 1970s, IBM took an outsourcing approach to its PC. The company hired Intel to perfect the processor for the PC and Microsoft to develop its operating system. Although IBM funded the processor and OS developments, it didn't protect the PC intellectual property and soon found that Intel and Microsoft emerged as vigorous competitors and spawned an entire industry that came back to haunt IBM.

In a separate SEC filing by Sanmina-SCI this week, the contract manufacturing firm restated its earnings projections downward slightly, but gave no indication that the IBM-Lenovo deal had any impact on the change.

In its filing, IBM said revenue in its Personal Systems Group was up 3.1 percent.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
2020 State of DevOps Report
2020 State of DevOps Report
Download this report today to learn more about the key tools and technologies being utilized, and how organizations deal with the cultural and process changes that DevOps brings. The report also examines the barriers organizations face, as well as the rewards from DevOps including faster application delivery, higher quality products, and quicker recovery from errors in production.
News
How COVID is Changing Technology Futures
Jessica Davis, Senior Editor, Enterprise Apps,  7/23/2020
Slideshows
10 Ways AI Is Transforming Enterprise Software
Cynthia Harvey, Freelance Journalist, InformationWeek,  7/13/2020
Commentary
IT Career Paths You May Not Have Considered
Lisa Morgan, Freelance Writer,  6/30/2020
Register for InformationWeek Newsletters
Video
Current Issue
Special Report: Why Performance Testing is Crucial Today
This special report will help enterprises determine what they should expect from performance testing solutions and how to put them to work most efficiently. Get it today!
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll