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IBM hands Lenovo billion-dollar PC loser

New filing shows failings

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IBM sold Lenovo a real clunker of a PC business, according to a new filing with the US Securities and Exchange Commission (SEC).

In the filing, IBM revealed that its PC business has been a huge money loser over the past three years. The PC unit lost a staggering $397m in 2001, $171m in 2002, $258m in 2003 and $139m through the first six months of this year. All told, IBM is handing Lenovo a business with nearly $1bn in losses in recent years.

IBM typically breaks out the revenue and profit (or loss) of its Personal Systems Group in financial filings. PSG, however, includes items other than just PCs and notebooks. The filing with the SEC provides the best look to date at the health or lack thereof of just IBM's computer business.

Through the first six months of this year, IBM's computer division pulled in $5.2bn in revenue. This compares with $4.3bn in revenue posted during the same period last year.

IBM's summed up the PC unit's performance nicely in the filing.

"The Business has a history of recurring losses, negative working capital and an accumulated deficit. The ability to settle obligations as they come due is dependent on IBM funding the operations on an ongoing basis."

IBM has agreed to sell its ailing PC business to China's largest PC maker Lenovo for $1.25bn and the assumption of debt. The new firm will be headquartered in Armonk, New York - also IBM's HQ - and run by a former IBM executive. ®

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