Business

Lenovo shares rise on IBM server deal

Lenovo tablet on display Image copyright AFP
Image caption Lenovo has diversified into products such as smartphones and tablets

Shares in China's Lenovo, the world's biggest PC maker, have risen after the firm agreed to buy IBM's low-end server business for $2.3bn (£1.4bn).

Its shares rose as much as 9% before ending the day up by 1.2% on the Hong Kong Stock Exchange on Friday.

The deal, announced late on Thursday, comes as PC makers are have been hurt by a slowdown in global demand for desktop computers.

The move is expected to open up new avenues of growth for Lenovo.

Yang Yuanqing, Lenovo's chairman and chief executive, said on Thursday that the acquisition "demonstrates our willingness to invest in businesses that can help fuel profitable growth and extend our PC Plus strategy".

Repeat performance?

The Chinese firm previously bought IBM's PC business in 2005, featuring the ThinkPad range.

It has since turned the business into a profitable one and the company overtook Hewlett-Packard as the world's top PC maker in 2012.

However, global PC sales have now fallen for six quarters in a row prompting manufacturers to look for new areas of growth.

Some analysts said that investors were betting that Lenovo would be able to repeat the success it had with IBM's PC business with the low-end server division as well.

Lenovo has already diversified into fast-growing sectors such as smartphone and tablets.

Its combined shipments of smartphones and tablets have surpassed those of PCs for two quarters in a row.

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