IBM Seeks to Shed Its Low-End Server Business

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By Trey Thoelcke Published
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International Business Machines Corp. (NYSE: IBM) is once again looking to shed its low-end server business, according to the Wall Street Journal. A deal to sell the so-called x86 server business to China’s Lenovo Group fell through last spring when the parties could not agree on a price. Dell is reportedly interested in the business now.

While low-end servers do not carry high margins, the business is growing, and that could offer Dell a boost as it shifts its focus more toward corporate clients. Closely held Dell is said to be the world’s third-largest server vendor by revenue, after IBM and Hewlett-Packard Co. (NYSE: HPQ).

It was unclear whether Lenovo was still interested in IBM’s low-end server business, or whether there were other potential buyers.

Over the past several years, IBM has sought to rid itself of low-margin businesses as it focuses more on areas such as software and services, a move that helped it avoid some of the pains felt by Dell and HP. IBM sold its personal computers business to Lenovo for just that reason.

But 2013 was a difficult transitional year for IBM, after bringing a new chief executive officer on board. Competition between IBM, HP, Oracle Corp. (NYSE: ORCL) and others has grown fierce due to weakness in overall information technology spending among enterprise customers. And IBM was the sole Dow Jones Industrial Average component to lose ground in 2013.

IBM is scheduled to release its latest quarterly results on Tuesday.

Photo of Trey Thoelcke
About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.

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