7 December 2004: IBM sells its PC business to Lenovo
IBM agreed to sell its personal computer division, including the ThinkPad brand, to China's Lenovo for $1.25 billion in cash, stock and assumed debt. IBM had created the standard PC in 1981, but the business had become a low-margin commodity. Selling it freed IBM to focus on software and services, while Lenovo went on to become one of the world's largest PC makers.
The lesson: Selling a famous but low-margin business can be the smartest move a company makes.
What it meant for investors
$1,000 in IBM at the start of 2005 → $2,959 today, vs $5,763 in the S&P 500.
We start the clock at the start of 2005, the first year in our price data after the event. That is 3.0 times the money, but $2,804 less than a plain index fund made over the same years.
What IBM teaches: Buybacks cannot substitute for growth; IBM spent tens of billions shrinking its share count while revenue declined, and the stock went nowhere for years.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2005 | $98.00 | $2,959 | $5,763 |
| 2007 | $97.00 | $2,990 | $4,789 |
| 2008 | $108 | $2,685 | $4,626 |
green = beat the S&P 500 · red = lost money
What if you bought IBM? Every starting year and the full story →
More IBM history
- 7 April 1964: IBM bets the company on System/360
- 11 May 1997: Deep Blue beats Kasparov
- 12 August 1981: IBM launches the personal computer
- 28 October 2018: IBM bets $34 billion on Red Hat
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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