LG, IBM to split by end of year

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LG, IBM to split by end of year

After a partnership of eight years, LG Electronics and IBM Korea are about to end their ties in LG IBM, a joint venture, an official of the company told the JoongAng Daily. The company is one of the leading firms in Korea’s computer and server industry.
The official, who did not want to reveal his name, said that Lee Tok-joo, chief executive of LG IBM, said at a meeting with workers Friday that the company is planning to split. Mr. Lee said he would announce specific plans in the middle of next month, and the breakup would occur later this year, the official said.
While LG IBM, IBM Korea and LG Electronics would not officially confirm the plan, saying no decision has been made, the LG IBM spokesman did not deny Mr. Lee’s statements, which appear to support rumors circulating in the market since early this year.
LG IBM was established in 1996: IBM Korea owns a 51 percent controlling stake.
The company was hit with a bribery scandal early this year. Former executives of IBM Korea have been jailed for bribing government clients and rigging bids, while officials of LG Electronics were fined.
Market observers say IBM Korea is expected to run the server business on its own, as the server market is bigger here; LG Electronics will stand alone in the personal computer business after gaining confidence due to the recent popularity of the Xnote laptop series, developed independently by LG Electronics.
The LG IBM official said if the company splits, IBM Korea is expected to take the server and ThinkPad laptop businesses, while LG Electronics will take the Xnote laptop and desktop computer businesses.
Mr. Lee promised at the meeting that the 190 LG IBM workers would be hired by LG Electronics or IBM Korea after the split. The union demanded the company guarantee their jobs for at least two years after the split. Mr. Lee was noncommital.


by Park Sung-ha
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