Saturday, December 18, 2004

Merger Mania

Well, I seem to be periferrally involved in two of the more written about M&A activity going on these days.

Firstly, IBM is selling its PC unit to Chinese company, Levano. Personally, I was surprised that IBM still had enough of a PC business to sell, since, IIRC, it had already shipped off much of that activity several years ago.

To employees at IBM, PCs are a very small part of what they do, the brands (servers and middleware software products) and services are much more important. To people outside of IBM, I guess its still PCs. At any rate, IBM should have exited this completely years ago.

Secondly, Sprint is buying Nextel. At the conference, Forsee (Sprint) looked a little nervous, and Donahue (Nextel) looked relieved. There are too many wireless carriers in the US, and I had been waiting for consolidation for a while. Nextel is actually an interesting company because it has a real competitive strategy (sell to construction workers etc.) and is quite different from the other guys, but became trapped in its niche. Sprint, after decades of dramatic growth, is coming to terms with being a mature company. Nextel selling itself to Sprint probably maximized shareholder value--good for them.


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