Every week it seems, more news breaks that IBM is looking for a buyer for yet another business unit. The latest news involves its semiconductor business.
IBM has appointed Goldman Sachs to shop the business around, Ed Hammond and Richard Waters from the Financial Times reports.
This is on top of news last week from Re/Code’s Arik Hesseldahl that IBM could be looking to sell its software-defined networking business. SDN is a new technology for building corporate networks.
We know that IBM wants to sell more business units because IBM’s CFO Martin Schroeter told us so last month on the quarterly conference call with Wall Street analysts:
“As we look forward to 2014, we will continue our transformation shifting of our investments to the growth areas … We will acquire key capabilities, we will divest businesses and we will rebalance our workforce as we continue to return value to shareholders.”
He warned that IBM’s Power line of Linux servers is struggling, and, by association, the Power chips at the heart of them. Power business revenue declined 31%, year over year, Schroeter said.
That’s not good because IBM is investing $US1 billion to improve its Linux business. The decline is because IBM can’t charge high prices for Linux servers anymore thanks to lots of competition in the Linux server market.
IBM has already been trying differnt tactics to help the Power chip, which has pretty much faded from popularity outside of IBM’s own use of it. Apple abandoned it for Macs in 2006 and Microsoft’s Xbox One switched to x86 chips from AMD instead of the Power chip used in Xbox 360, Ars Technica’s Andrew Cunningham reports.
Last summer, IBM tried to do for the Power chip what ARM Holdings has done with its chips, licensing out its new Power8 chip designs to others. It launched the OpenPOWER consortium, with Google, Nvidia, and others signing on.
But that tactic is slow going and so last month Schroeter warned:
“We recognise that the Power platform will not return to prior revenue levels. We will take action in this business to reflect the new business model.”
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