The newspaper cited anonymous sources close to the negotiations.

IBM spokesman John Bukovinsky refused to comment yesterday. Spokesmen at Lenovo's Beijing headquarters and Hong Kong offices did not return calls.

IBM shares rose $1.32, or 1.4 percent, to $97.08 in New York Stock Exchange composite trading yesterday.

Analysts have said a sale of the PC business would make sense for IBM.

Ben Reitzes, an analyst at UBS Investment Research, said in a July research note that the business could be sold. He noted the PC business accounts for about 10 percent of IBM's total sales.

Its profits have been slim. Morgan Stanley said IBM's PC business contributed less than 1 percent of the company's earnings per share.

It would make sense for an Asian computer maker to buy the business, since they face intensified competition from the PC industry leader Dell Inc. "By linking up with a heavyweight like IBM, vendors would logically think they could fend off any threat better," Reitzes said.

IBM is increasing its focus on consulting and outsourcing services and software, analysts said.

"They've been very clear that they intend to streamline and prioritize around new growth opportunities," said Mark Stahlman, technology strategist at research firm Caris & Co. "PCs are not one of them."

Some worried that selling the PC business would give IBM less leverage to "upsell," the term for a computer makers' ability to sell services and software to its hardware customers.

"IBM needs to make sure they protect the upsell opportunity," Reitzes said.

While IBM designs all its PCs, the company no longer makes PCs at any plants it owns alone. Instead, all its PCs are either produced through joint ventures or outsourced to other manufacturers. IBM has deals with equipment makers Solectron Corp., Sanmina Corp., Wistron Corp. and Quanta Computer Inc. Sanmina bought the last company-run PC plant in 2003.

Armonk, N.Y.-based IBM was a major force in driving personal computing into the mainstream with its introduction of the IBM PC in 1981.

As personal computers shrunk in size and price, they became fixtures on the desks of everyone from college students to NASA scientists. Before the PC, the only way to complete computer-level computations was by using a mainframe computer — machines that could take up entire rooms and were so expensive, only the biggest companies and wealthiest universities could afford one.

But competition has driven down prices.

The executives in charge of corporate technical systems are under pressure to keep costs low, said Eric Johnson, director of the Center for Digital Strategies at Dartmouth University's Tuck School of Business.

"PCs are beginning to look more like pencils to them; they are just a commodity appliance," he said.

IBM's sales from personal computers, printers and point-of-sale terminals increased 17 percent in the first nine months of the year, driven by strong sales of its ThinkPads.

But 2003 was tougher. Sales were up 3.1 percent in 2003 versus 2002, according to the company's annual report. The increase was entirely due to the weak dollar, which improved sales abroad. Factoring out the weak dollar, sales fell 2.5 percent.

Revenues for personal computers decreased because prices for the computers continue to fall, the report said.

IBM ranks third behind Dell of Round Rock, Texas, and Hewlett Packard Co. of Palo Alto, Calif., in the personal computer business, according to Gartner Inc., a Stamford-based provider of research and analysis on the information technology industry.