Chinese Computer Firm-IBM Get Security Ok

[rickjump1 0]

I got this off of Excite.com. I don't like it; especially the idea of them retaining military and national security agencies pc business.




Chinese Computer Firm-IBM Get Security OK



Wednesday March 9, 10:20 AM EST


By Eric Auchard

SAN FRANCISCO (Reuters) - China's Lenovo Group Ltd. (0992) won clearance from a U.S. national security oversight committee to acquire IBM's (IBM) personal computer business, the companies said on Wednesday, overcoming resistance from some U.S. lawmakers

An IBM executive said the high-level U.S. committee had given the deal its unanimous consent -- the final external approval needed -- putting the $1.25 billion PC sale on track to close in the second quarter as originally planned.

"We were able to get unanimous agreement from the members of the committee," Stephen Ward, the general manager of IBM's Personal Systems Division, said in a telephone interview.

Ward is to become chief executive of Lenovo, once the deal closes. Lenovo is headquartered in Beijing, but will move to an undisclosed site near IBM's headquarters in Armonk, New York.



The merger of the IBM PC business with China's biggest PC maker -- the first combination ever of a major U.S. company and a top Chinese one -- will create the world's third largest PC maker with roughly $12 billion in revenue and one strongly positioned in several fast-growing markets.

The deal had met unexpected resistance when some U.S. lawmakers began decrying the loss of a U.S.-based PC maker to China. In addition, some government officials, according to media reports, were concerned that Chinese nationals working for Lenovo in the United States might act as industrial spies.

Despite the review, approval of the deal had been widely anticipated on Wall Street. IBM shares rose 42 cents to $92.55 in early trading on the New York Stock Exchange.

Ward said terms of the approval are confidential, but that no compromises were required over the location of Lenovo facilities in sensitive research areas, nor were limits put on Lenovo's ability to sell PCs to U.S. agencies.

"I don't think we made any compromises at all," Ward told Reuters.

Rival PC makers such as Dell Inc. (DELL) and Hewlett-Packard Co. (HPQ) have been seeking to woo corporate PC customers away from IBM by citing the regulatory overhang as well as uncertainty over Lenovo's future PC product strategy.

Industry experts say that underlying the cross-border combination of the two companies is a belated recognition of the fact that most PCs -- including IBM's machines -- are already largely manufactured in the greater China region.

IBM plans to keep a 19 percent stake in Lenovo after the merger, allow Lenovo to use its PC brands for five years, and retain service, financing and support operations for PCs.

FINAL REGULATORY STEP

The go-ahead from the Committee on Foreign Investment in the United States (CFIUS) was received on Tuesday, Ward said.

CFIUS, which is composed of 11 U.S. agencies and was created in 1998 to conduct security reviews of business deals, includes members of the U.S. departments of Treasury, State, Defense, Justice and Homeland Security.

"Everything that CFIUS asked of us was perfectly reasonable and the type of things that would be in a business plan," Ward said.

He said IBM PC staff working in the Research Triangle Park, North Carolina, area will be relocated to a single campus that is being sold by IBM to Lenovo and is located in the same industrial park. Separation from the rest of IBM is in line with plans to run Lenovo as a distinct company, Ward said.

Asked if IBM could retain U.S. military and other national security agencies as PC customers, Ward said there were no restrictions on the new Lenovo and it would be free to do business with U.S. government agencies. "We can do business with anyone we want to do business with," he said.

U.S. antitrust authorities in January cleared the deal, and Lenovo shareholders have also approved it.

What is left is largely internal planning and integrating steps to complete the merger.

"We are still looking at closing the transaction in the second quarter," IBM spokeswoman Carol Makovich said. "We are on track."


©2005 Reuters Limited. [url]

Do your part for global warming: ban beans and hold all popcorn farts.

[kelpdiver 2]

the ownership change doesn't really alter the security concerns for pc purchases. Taiwan is already the home of many of the motherboard makers and Chinese factories produce a lot of the other components.

The network infrastructure is still the key. My windoze install tells me when an application tries to send data out. I imagine the NSA not only does that sort of thing, but doesn't allow external access on the same machines that contain sensitive data.

[jdhill 0]

I didn't see anything about retaining business, only that they would no be restricted from pursuing business with those agencies... it may not mean those agencies can do business with them.

All that is necessary for the triumph of evil is that good men do nothing. - Edmund Burke

[rickjump1 0]

Lets hope there is no deal to retain these security agencies. Kelpdiver is correct that sensitive material need not be passed if it's safeguarded.

I guess this is Mao's "modern guerilla warfare": attack your enemy without firing a shot; simply buy him out.

Do your part for global warming: ban beans and hold all popcorn farts.

[Sen.Blutarsky 0]

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I got this off of Excite.com. I don't like it

I do like it, since perpetuating the threat-counterthreat cycle is the only thing that keeps my defense stock shares appreciating in value. Plowshares aren't lucrative. God, I almost sound like a Texan.

[rickjump1 0]

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Quote

I got this off of Excite.com. I don't like it

I do like it, since perpetuating the threat-counterthreat cycle is the only thing that keeps my defense stock shares appreciating in value. Plowshares aren't lucrative. God, I almost sound like a Texan.

I don't think China is perceived as part of the threat-counterthreat cycle to US business now. I would hope you have oil stocks too; not just to make you sound like a Texan.

Do your part for global warming: ban beans and hold all popcorn farts.

[SkyDekker 1,465]

I have said it before, better start learning Cantonese and Mandarin. When you guys are still trying to figure out how to pay off your massive ( and fastly growing) debt, they will be the next superpower and there is nothing you can do to stop it now.

[rickjump1 0]

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I have said it before, better start learning Cantonese and Mandarin. When you guys are still trying to figure out how to pay off your massive ( and fastly growing) debt, they will be the next superpower and there is nothing you can do to stop it now.

No kidding, and it started with a republican visiting China to get rich

Do your part for global warming: ban beans and hold all popcorn farts.