Why IBM Is Paying $1.5 Billion To Lose A Business   2 comments

UNITED KINGDOM - MAY 21:  The IBM 'Power6' chip displayed at a product launch in central London, U.K., Monday, May 21, 2007. IBM introduced servers with its Power6 processor, a chip that lets users boost computer performance or reduce energy use, stepping up competition with Hewlett-Packard Co. and Sun Microsystems Inc.  (Photo by Graham Barclay/Bloomberg via Getty Images)

Link: http://www.marketplace.org/topics/business/why-ibm-paying-15-billion-lose-business

Summary: IBM has fell 7 percent off its stock price this week. IBM is selling its chip making company to GlobalFoundries for $1.5 billion over the next three years. It would sound unconventional, except when looking to the future. IBM will be receiving chips for the next ten years from GlobalFoundries. Deals like this are exceedingly rare, but IBM has realized truth: it would be more costly to shut down than to sell, and they may be saving money in the end.

Original Air Date: October 20, 2014

Length: 2 minutes 22 seconds

Prompt / Discussion: Discuss how this type of deal differs from collusion.

2 responses to “Why IBM Is Paying $1.5 Billion To Lose A Business

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  1. This was a marvellous video regarding IBM, one that I really enjoyed. I especially loved the concise way in which it conveyed all the information required. Allow me a brief introduction: I’m a 15 year old with an interest in finance and economics who wants to share my views with the world at shreysfinanceblog.com. If you could read and reblog one of my articles, it would be very much appreciated! Thanks again for writing this brilliant article.

  2. Even though we all hate to admit it but the tower PC market has been in a steady decline phase these last years. Its no surprise that IBM would want to sell out rather than holding tight and possibly crashing and burning. I just wonder if companies like NVidia, AMD, and Intel will manage to diversify their productlines enough to stay viable players in the chip industry.

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