IBM merges chip, computer divisions

NEW YORK: International Business Machines Corp. said it had combined its money-losing microchip business with its computer systems groups to more closely align the businesses' objectives.

The move, which was announced in an internal memo on Thursday, creates a unit called the Systems and Technology Group, which will be co-headed by technology group manager John Kelly and systems group leader William Zeitler.

A spokesman for IBM, which is based in Armonk, New York, said the company will wrap the two divisions' results together in its consolidated quarterly results but will also continue to provide a break-out for the technology division's revenue and pre-tax income.

IBM's technology group is largely made up of its microelectronics division, which makes chips that are used as the brains of its server computers and mainframes. About one-third of its business is making chips for outside companies, such as Apple Computer Inc., Nintendo Co., Nvidia Corp.

Its systems group includes computer servers and data storage machines.

IBM has made other organizational changes in the past few years, including breaking out its data storage division from its computer server division, and then merging it back in again.

Earlier this week, IBM announced plans to cut 300 jobs in its server division.

© Reuters