|Lenovo maps path to smartphone heavyweight
The chairman of Lenovo pledged to make the company the world's third-biggest smartphone seller. The company today announced a 30 percent profit surge.
Lenovo, already the world's largest personal computer vendor, snapped up US telco Motorola Mobility for US$2.91 billion and IBM's low-end server business for US$2.3 billion within days of each other last month, AFP reports.
“We will become the number three smartphone player in the world,'' Lenovo Chairman Yang Yuanqing told journalists on a conference call. “With the combined business of Motorola smartphone and Lenovo smartphone, we will have much larger scale.''
That would put it in position to challenge Apple, now the global number two behind South Korea's Samsung, AFP reports.
Lenovo was ranked fifth in the global smartphone market last year with a 4.5 percent share, trailing Samsung, Apple, compatriot Huawei and South Korea's LG, according to market research firm IDC.
But analysts say Motorola is deeply unprofitable with losses approaching US$1 billion and some question whether Lenovo can turn the business around.
Lenovo's Hong Kong-listed shares have slumped 14 percent since the Motorola deal was announced. At mid day today, the stock was down 0.46 percent on the day at HK$8.64 per share.
The company announced net profit in October-December – its fiscal third quarter – jumped 30 percent year-on-year to US$265 million, helped by laptop sales, according to a statement. Revenue gained by 15 percent on the year to US$10.8 billion.
Lenovo plans to re-launch the Motorola smartphone brand in China as well as other emerging markets, Yang said.
In China, Lenovo is in second place with a 12.5 percent share of the smartphone market, behind only Samsung with 18.4 percent, as of September, according to consultancy Analysys International.
Yang defended the two rapid acquisitions, saying they presented rare opportunities for the Chinese company. Lenovo also bought IBM's PC business in 2005.
“We have made a lot of acquisitions before. We know how to manage the integration and products, how to manage the challenge and the risk,'' he said.