IBM Partners Cheer Potential Sale Of x86 Server Business

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Mark Loughridge
Mark Loughridge of IBM


IBM solution providers are applauding the potential sale of the computer giant's low-end x86 based System x server line to Lenovo.

The potential sale of a "low-margin" System x server line would be positive for both IBM and its partners, said David Stone, vice president of business development at Solutions-II, a Littleton, Colo.-based IBM partner.

"The IBM channel is more value-oriented," said Stone, noting that rumors of a possible sale of IBM's x86-based server business have been circulating for the past 45 days. "Volume players will move to the Lenovo level. Value players will move to [IBM] PureFlex."

CRN Thursday reported that IBM is in active negotiations to sell its x86-based server business, with Lenovo emerging as the front-runner to buy the business.

Responding to a CRN report that Lenovo has emerged as the top candidate to buy IBM's x86 server hardware business, Lenovo Chairman and CEO Yang Yuanqing said the China-based computer giant is in "preliminary negotiations with a third party in connection with a potential acquisition."

Aaron Rakers, an analyst with Stifel Nicolaus Equity Research, wrote in response to IBM's first-quarter 2013 results and the CRN report of a possible IBM-Lenovo deal that a "sale of IBM's x86 server division would certainly be viewed as an indication that the industry is rapidly evolving toward margin compression."

Lenovo is currently the only company in negotiations to purchase IBM's x86 server business, according to one high-ranking executive tracking the deal, who spoke to CRN on condition of anonymity earlier this week. The deal would likely encompass IBM's System x line, which includes Intel- and AMD-based tower, rack and blade servers. IBM is reportedly seeking $5 billion to $6 billion for its x86 server business, the executive said.

IBM CFO Mark Loughridge Thursday declined to comment on the CRN report when asked about it by a financial analyst on the company's first-quarter earnings call.

Loughridge, however, confirmed the divestiture of poorly performing businesses is planned for the current quarter.

"There are parts of our business that are in transition or have been underperforming, like elements of our Power, [System] x and storage product lines that showed disappointing performance in the first quarter," Loughridge said. "Here we're going to take substantial actions," he said, without offering details.

IBM Thursday reported that total systems revenue for its first fiscal quarter of 2013 dropped 13 percent, after adjusting for currency.

NEXT: IBM Server Sales Down, But Numbers Aren't Everything

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