IBM Seeks to Shed Its Low-End Server Business

International Business Machines Corp. (NYSE: IBM) is once again looking to shed its low-end server business, according to the Wall Street Journal. A deal to sell the so-called x86 server business to China’s Lenovo Group fell through last spring when the parties could not agree on a price. Dell is reportedly interested in the business now.

While low-end servers do not carry high margins, the business is growing, and that could offer Dell a boost as it shifts its focus more toward corporate clients. Closely held Dell is said to be the world’s third-largest server vendor by revenue, after IBM and Hewlett-Packard Co. (NYSE: HPQ).

It was unclear whether Lenovo was still interested in IBM’s low-end server business, or whether there were other potential buyers.

Over the past several years, IBM has sought to rid itself of low-margin businesses as it focuses more on areas such as software and services, a move that helped it avoid some of the pains felt by Dell and HP. IBM sold its personal computers business to Lenovo for just that reason.

But 2013 was a difficult transitional year for IBM, after bringing a new chief executive officer on board. Competition between IBM, HP, Oracle Corp. (NYSE: ORCL) and others has grown fierce due to weakness in overall information technology spending among enterprise customers. And IBM was the sole Dow Jones Industrial Average component to lose ground in 2013.

IBM is scheduled to release its latest quarterly results on Tuesday.

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