IBM is seeking a buyer for its worldwide network infrastructure in the hope of lowering costs while increasing its focus on the services that run on top of the network, sources familiar with the company's plan said this week.
The sources did not disclose any potential buyers for the IBM Global Network, but said the company is targeting major telecomms companies. The network could garner as much as $US4 billion, the sources said. Securities firm Merrill Lynch is handling the sale, they added.
An IBM spokesman here declined to comment on the proposed sale.
The reason for the sell-off is part of a larger move by IBM towards providing value-added services and consulting while shifting away from areas with lower profit margins, the sources said. In recent years, for instance, the company has rapidly increased revenues flowing from services such as system installation and training while lowering its dependence on less profitable areas such as hardware.
"It's part of the evolution of IBM," one source said. "You add some new things and you let go of some old things."
Under IBM's plan, the vendor would sell the network infrastructure to a company that specialises in network management -- namely a telco -- and lease the network from the buyer, the sources said. The sources emphasised that IBM only hopes to rid itself of the burden of overseeing the network's nuts and bolts so that it can build upon the services it currently offers on the network, such as remote access and electronic transactions.
The IBM Global Network provides companies with leased line and dial-up access service from 900 cities and 100 countries and offers individual users local dial-up Internet access at 1350 locations spread over 53 countries. The network is the backbone for many of IBM's internal communication channels as well as the pipeline through which the company offers services to its customers worldwide.
One source said IBM is better off freeing itself from the $US200 million it costs annually to maintain the Global Network.
"It's a lot of overhead to carry for a basic infrastructure," the source said. "Nowadays, if you want a worldwide network there are many people you can buy it from."