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IBM's PC Division: No Profit in Over 3 Years | |
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| Time: 11:56 EST/16:56 GMT | News Source: WinInformant | Posted By: Chris Hedlund | ||
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In a regulatory filing with the US Security and Exchange Commission, International Business Machines (IBM) revealed that its PC business, which was recently sold to Chinese computer giant Lenovo for $1.25 billion, hasn't been profitable for at least three and a half years. The revelation, which IBM would not have made were it not legally required for the sale to complete, was unusually blunt in its discussions about the economics of the PC business. "The [PC] business has a history of recurring loses, negative working capital, and an accumulated deficit," IBM wrote in the filing. "The ability to settle obligations as they come due is dependent on IBM funding the operations on an ongoing basis." The business lost $258 million in 2003, $171 million in 2002, and $397 million in 2001. In the first half of 2004, IBM's PC business lost $139 million on sales of $5.2 billion. | ||
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| #1 By 2960 (156.80.64.173) at 1/3/2005 2:04:50 PM |
| How can you charge $900 for a Laptop Screen replacement and not make money? |
| #2 By 9589 (66.26.231.95) at 1/3/2005 2:16:25 PM |
|
Perhaps if IBM hadn't spent $1B+ dollars on *nix crap and concentrating on mfd. efficiencies and economies of scale they wouldn't find themselves in this predicament. Yet, it flows from their total hardware and software monopoly in mainframes. They haven't had to compete in this area, their cash cow, for decades.
By the way, the losses in their PC division go far beyond 3 1/2 years. Some say they have been suffering losses for over a decade. The astonishment was that they held out so long to get rid of the division or make major changes in their business model. Having said the above, IBM has created terrific advancements in the industry. For example, several years ago they came up with a hard drive that was the size of quarter and yet held gigabytes of data - remarkable at the time. Yet, a couple of years ago, they sold off their entire disk drive business to Hitachi. Again, it was a question of getting rid of this division or changing their business model. Is there a pattern here? This post was edited by jdhawk on Monday, January 03, 2005 at 14:17. |
| #3 By 8556 (12.217.111.74) at 1/4/2005 12:42:08 AM |
| Ask an accountant "how much did we lose"? The answer might be "how much do you want to lose". The financial loss in a specific division of a complex money-making corporation depends on how and where the costs are allocated. |
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