Oh, here’s some good news on IBM’s facility in Essex, courtesy of Bloomberg.
IBM was willing to pay Globalfoundries Inc. to take on IBM’s money-losing chip-manufacturing operations, according to a person familiar with the process.
IBM was offering about $1 billion to persuade Globalfoundries to take the unit, said the person, who asked not to be identified because the negotiations were private. Globalfoundries wanted to be paid about $2 billion, enough to offset the division’s losses, the person said.
Okay, first we’ll posit that IBM’s chip division includes other plants besides Essex, so we can’t blame that plant alone for IBM’s negative equity. But it is a stark reminder that Essex and IBM’s other chip operations are basically dead weight. And now that Globafoundries has withdrawn from the bidding, IBM is desperate to unload the division:
IBM’s willingness to pay underscores the urgency for Chief Executive Officer Ginni Rometty to get less profitable businesses off the books.
Rometty’s top priority is to reverse recent losses, and hit very ambitious earnings targets by 2015. Er, that’s five months from now.
To stay competitive in manufacturing, IBM may have to invest billions of dollars to keep its plants up to date with newer chip technology. IBM’s East Fishkill location cost $2.5 billion to build.
We’re talkin’ billions of losses and/or risky investments in a market that IBM has basically lost to Intel. When you compare that awful reality to Vermont’s potential offer of a few million bucks in incentives, you see the scope of the problem and the almost complete inability of li’l ol’ Vermont to make a difference. Somehow I don’t think resurrecting the Circumferential Highway or another cut in electricity rates will save this sinking ship. Nor would the more business-friendly “tone” that Scott Milne keeps promising. And it’s hard to see what the Shumlin Administration, or any other administration, could possibly do in the face of such dismal market realities.