IBM will provide accounts-receivable lending, also called factoring, to AMD, providing them with upfront payment while they wait up to four months to receive payment from a customer.
IBM spokeswoman Harriet Ip said the deal would generate "hundreds of millions of dollars" of business for IBM this year. IBM also anticipates adding new customers for the financing unit.
The move highlights how IBM is branching into service, consulting, and financing businesses in China that are far removed from its original core business of manufacturing computers.
Though this is IBM's first factoring operation in China, accounts receivable financing is a big business for the company worldwide. IBM's global financing unit had an asset base of $36 billion in 2008, around a third of which was from its commercial financing business, which includes factoring, according to Ms. Ip.
IBM has been financing IT equipment for nearly 30 years and roughly 9% of IBM's profit came from its finance arm in 2008. The company said it is staying in the IT financing space during a period where banks and other lenders that had gotten into other areas such as mortgages backed out of the space. "We have stuck to our core competency, which is IT lending," said Dan Ransdell, general manger of worldwide client financing for IBM Global Financing. "We are fortunate we haven't seen the losses that a lot of other financial institutions have. A lot of the others financed a much broader portfolio."
IBM said it has been granted an exclusive license to provide accounts-receivable lending in the Tianjin Binhai New Area, a special economic zone in the northeastern port city of Tianjin.
"What's intriguing to me is the almost privileged position they are awarded in China," said Tony Sacconaghi, a technology analyst at Sanford C. Bernstein in New York.
In a statement, Mario Bernardis, a general manager at IBM Global Financing, described the license as "a first of its kind in China." IBM has cultivated good government relations in China by working on many public infrastructure and environmental projects that are a priority for Beijing.
Last year, Beijing announced a "smart city" project in Shenyang, whereby it will help the city upgrade its sewage system and its environmental conditions using its technology and management expertise.
Source : http://online.wsj.com/article/SB10001424052748703535104574646110840084446.html?mod=googlenews_wsj
IBM spokeswoman Harriet Ip said the deal would generate "hundreds of millions of dollars" of business for IBM this year. IBM also anticipates adding new customers for the financing unit.
The move highlights how IBM is branching into service, consulting, and financing businesses in China that are far removed from its original core business of manufacturing computers.
Though this is IBM's first factoring operation in China, accounts receivable financing is a big business for the company worldwide. IBM's global financing unit had an asset base of $36 billion in 2008, around a third of which was from its commercial financing business, which includes factoring, according to Ms. Ip.
IBM has been financing IT equipment for nearly 30 years and roughly 9% of IBM's profit came from its finance arm in 2008. The company said it is staying in the IT financing space during a period where banks and other lenders that had gotten into other areas such as mortgages backed out of the space. "We have stuck to our core competency, which is IT lending," said Dan Ransdell, general manger of worldwide client financing for IBM Global Financing. "We are fortunate we haven't seen the losses that a lot of other financial institutions have. A lot of the others financed a much broader portfolio."
IBM said it has been granted an exclusive license to provide accounts-receivable lending in the Tianjin Binhai New Area, a special economic zone in the northeastern port city of Tianjin.
"What's intriguing to me is the almost privileged position they are awarded in China," said Tony Sacconaghi, a technology analyst at Sanford C. Bernstein in New York.
In a statement, Mario Bernardis, a general manager at IBM Global Financing, described the license as "a first of its kind in China." IBM has cultivated good government relations in China by working on many public infrastructure and environmental projects that are a priority for Beijing.
Last year, Beijing announced a "smart city" project in Shenyang, whereby it will help the city upgrade its sewage system and its environmental conditions using its technology and management expertise.
Source : http://online.wsj.com/article/SB10001424052748703535104574646110840084446.html?mod=googlenews_wsj
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