Yesterday, IBM's quarter missed expectations on both profit and revenue, and CFO Mark Loughridge heavily blamed its server business during a conference call with analysts and said a big change was coming to it:
"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. Here we are going to take substantial actions.
IBM has multiple server businesses including its PowerSystems family, which use IBM's own Power CPUs. These compete with Oracle's new T5 server announced this month. There's also the PureSystems family, which are "tuned" for specific uses, IBM says.
If a deal does go down, it would likely be for IBM's System x line of Intel- and AMD-based servers and IBM could get $5 billion to $6 billion for the sale, McLaughlin's sources say.
IBM would be following in Oracle's footsteps, too, getting out of low-margin commodity servers to focus on pricier, high-margin "engineered systems" as Oracle CEO Larry Ellison calls them.
That's not a bad idea.
Lenovo bought IBM's PC business in 2004 and would be a good candidate to buy the server business because Lenovo doesn't compete with IBM's other lines of business.
More From Business Insider
- How An Erupting Volcano Led Ross Mason To Create An $80 Million Enterprise Startup
- Startup Founder Ramona Pierson Has Survived Worse Things Than Most People Can Imagine
- Microsoft Finally Reveals How Well Its Google Apps-Killer Cloud Is Doing
- Information Technology