Computing giant IBM just sent around a notice to reporters that it will be making a “major business announcement” tomorrow morning, before markets open for trading. It will also report quarterly earnings.
IBM Appears Close to Selling Chip Unit to GlobalFoundries
Big Blue will also report quarterly earnings early.
Tomasz Bidermann / Shutterstock
The news appears to be a plan to sell off its chip-manufacturing unit, formally known as IBM Microelectronics, to GlobalFoundries, the chip manufacturing company. IBM has been in on-again, off-again negotiations with GlobalFoundries to sell this unit; the latest chatter has the talks back on, with IBM essentially paying the other company to take the business off Big Blue’s hands, in part because its factory in upstate New York is kind of old. Bloomberg just reported that IBM will pay GlobalFoundries $1.5 billion to take it.
A sale would be politically sensitive, too — because IBM employs a lot of people in the chip business and because over the past decade, the state of New York has sought to encourage both IBM and AMD — which preceded GlobalFoundries — to build there.
As for earnings, here is what the Wall Street analysts expect: A per-share profit of $4.32 on sales of $23.4 billion. And it’s on track to deliver about $17.87 in earnings this year on $97.4 billion in revenue.
Big Blue has a big promise, made by former CEO Sam Palmisano, to deliver on by 2015, and that’s to hit $20 a share in profits for the full year. This has tended to look incrementally more difficult as this year has passed — so much so, in fact, that some analysts have called for CEO Ginni Rometty to formally change the goal or simply concede that it’s not realistic, which she has so far declined to do.
This article originally appeared on Recode.net.
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