Dell Downplays Threat Of 'Rumored' IBM/Lenovo Deal

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"If you look at the last few years, there has been a continuing trend, not only a decline in markets, but a de-emphasis and divesting of assets in the small-computer business at IBM. It's clear that this is not a long-term strategic priority for them," Dell told reporters at the Oracle OpenWorld show in San Francisco.

The chairman of Round Rock, Texas-based Dell characterized the impending deal as "a rumor" and said that if it happens, it merely continues IBM's long trek out of the small-systems business.

Sources expect the nuts and bolts of the deal, first reported last week in The New York Times, to be unveiled after the close of business today. Trading on Lenovo stock has been suspended due to talk of the negotiations. IBM is expected to retain a minority interest in Shanghai-based Lenovo, formerly known as Legend.

Dell, echoing comments of other IBM watchers, cited IBM's previous sale of manufacturing facilities and related businesses over the past few years.

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While IBM has struggled to keep up with Dell in volume PC shipments, its ThinkPad brand in particular remains a huge asset, channel partners and others say. Researcher Gartner ranks IBM third behind Dell, and Hewlett-Packard, Palo Alto, Calif., in PC unit sales.

But Dell, who was asked why his company hadn't bought IBM's business, said it is difficult for mergers and acquisitions to prosper in this computer business. "I'm not a big fan of taking companies and smashing them together. ... When was the last time you saw a successful merger or acquisition in the computer industry?"

He also tried to contrast Dell's decision to increase its support and customer service presence in North America with other competitors that are shipping more of those jobs to Asia.

"Companies give up competitive advantages when they outsource and offshore," he said, listing new Dell facilities, which include a call center in Oklahoma City, a facility in Edmonton, Alberta, and a new small parts hub in Ohio. He said Dell is fielding those new sites to support its growth in the United States.

As for not acquiring IBM's business, Dell said: "We like to acquire our competitors one customer at a time."