IBM Corp is unlikely to follow NEC Corp in taking up its rights under Compagnie des Machines Bull SA according to sources at IBM contacted by the International Herald Tribune – a development that could bode ill with the European Commission, which has to approve the total $1,500m recapitalisation, almost all from the French state and its France Telecom agent. A key Commission rule on nodding through state aid is that it should be justifiable on pure commercial grounds, so an indication from IBM that Bull is a bad risk would be serious. It seems that the emperor’s lack of clothes in the so-called restructuring plan announced last month has not escaped IBM: the paper’s sources cited the lack of a restructuring plan on which to base a decision as well as IBM’s own financial problems. Now is not a good time, even if we thought it was a good investment, said an anonymous source at IBM Europe in Paris: We have to answer to our own shareholders. Business is about priorities. IBM’s $100m bought 5.7% of Bull, and it is being invited to put up another $55m – pro rata rather less than NEC – to maintain its stake; if it sits on its hands, the stake will reportedly fall below 1%.
