By Larry Rulison Updated 9:18?am, Thursday, September 8, 2016
MALTA — IBM won a major legal victory Wednesday when a federal judge
tossed two lawsuits that claimed the company botched its 2015 sale of
its computer chip business to .
The sale, in which IBM paid GlobalFoundries $1.5 billion to take over
its failing microelectronics manufacturing unit, helped to boslter the
size and manufacturing prowess of GlobalFoundries, which employs 3,000
people at its Fab 8 computer chip factory in Saratoga County.
But the lawsuit alleged that for many years, IBM executives had
concealed from view just how much money its chip business was losing
and had overstated its value in regulatory filings up until its October
2014 announcement that it had struck a deal with GlobalFoundries to take
over the business as well as its two chip "fabs" in East Fishkill in
Dutchess County and Essex Junction, Vt. IBM ended up writing off
billions of dollars from the sale, even though it had previously valued
the business at $2.4 billion.
Shares of IBM fell nearly 20 percent on Oct. 20, 2014, the day that the sale to GlobalFondries was announced.
The lawsuits had been brought by current and former IBMers and a
union pension fund in U.S. District Court in Manhattan claiming that the
drop in IBM stock hurt retirement funds that held IBM stock.
GlobalFoundries ended up hiring hundreds of former IBMers as part of
the deal, especially top engineers with knowledge of IBM's manufacturing
process. IBM still has a large employee base at
in Albany, where IBM is still involved in cutting edge chip research.
As part of the sale, IBM signed a 10 year manufacturing contract with
GlobalFoundries to make the chips it had previously been making in East
Fishkill and Vermont.
The sale was key to efforts by IBM to boost its profits. The IBM chip
business lost $700 million in 2013 and similar results were expected in
2014 when the sale was announced.
The lawsuits reveal that GlobalFoundries was not the only company that IBM had approached for the deal. were also courted, according to one of the suits.
