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IBM reportedly in advanced discussions to sell part of server business to Lenovo

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IBM logo stock
IBM logo stock

Close to eight years after IBM made waves by selling off its consumer PC business to Lenovo, the corporation is said to be in advanced discussions to sell part of its server business to the Chinese company. The news comes from multiple sources, including The Wall Street Journal and Bloomberg, with the latter saying the deal could be made for $2.5 billion to $4.5 billion. Reports say that a deal would see IBM's low-end x86 server business, which is branded System x, go to Lenovo. That business has been underperforming, and news of a possible sale comes shortly after IBM announced disappointing earnings for the first quarter of 2013.

Revenue dropped five percent over that period as the company missed expectations, with a 13 percent drop in hardware revenues leading a one percent drop in profits in Q1 2013. Year-over-year, System x revenues dropped nine percent compared to a seven percent increase for IBM's System z mainframe business, which the company is not looking to sell. Lenovo told investors today in a clarification announcement that it "is in preliminary negotiations with a third party in connection with a potential acquisition," but it has not confirmed talks with IBM specifically.