Tue, Sep 04, 2012 - Page 15 News List

Lenovo mulls purchases for expansion

MOBILE DEVICES:The company plans to offer 40 models this fiscal year to cover all price and customer segments, and expects to turn profitable in a couple of quarters

Bloomberg

Lenovo Group Ltd (聯想集團) said it would consider acquisitions to drive growth and build competence as the world’s second-largest PC maker expands in new areas such as mobile devices.

“We would fully leverage this tool if the target is consistent with our strategy,” CEO Yang Yuanqing (楊元慶) said in a telephone interview on Friday from Beijing. “Any area which is consistent with our strategy where we are weak, we would like to consider acquisitions.”

As Lenovo gets closer to its goal of passing market leader Hewlett-Packard Co in global computer shipments, Yang is looking at ways to sustain the fastest annual pace in sales growth in six years.

The company will introduce 40 phone models this fiscal year, which started on April 1, Yang said.

Lenovo, which bought the PC division of IBM Corp in 2005, boosted sales last year by buying control of Medion AG, an Essen, Germany-based computer maker, and the PC unit of Tokyo-based NEC Corp. Sales rose 37 percent to US$29.6 billion in the year ended March 31, the fastest rate since the 12 months through March 2006.

Yang is now stepping up development of smartphones, tablets and Internet-ready televisions to widen the company’s offerings, following Apple Inc and Samsung Electronics Co. Yang declined to comment on specific potential acquisitions.

The company, whose headquarters are in Beijing and Morrisville, North Carolina, will introduce a wider array of phone models this fiscal year, making its strategy very different from a company like Apple that relies on the iPhone, Yang said.

“Some companies use just one model to cover all the price bands and customer segments,” Yang said. “We will have multiple models to cover different price bands. We will have a much broader, wider product portfolio. Our development cycle will be much faster than our competitors.”

Lenovo, which started smartphone sales two-and-a-half years ago in China, will start selling the devices in India, the Philippines and Indonesia in “a couple of months,” Yang said.

The phone business, which currently loses money, will become profitable in “a couple of quarters,” Yang said.

Lenovo overtook Apple during the second quarter for second place in smartphone sales in China, the world’s largest handset market.

The firm jumped from seventh place in the first quarter to claim 11 percent of China’s smartphone sales in the three months ended June 30, market researcher International Data Corp (IDC) said on Aug. 24. Apple’s share fell to 10 percent from 19 percent. Both trailed leader Samsung’s 19 percent share, IDC said.

Acquisition is a “key strategy,” BOCI Research Ltd analyst Geng Yang (楊賡) wrote in a research note dated yesterday.

The target may be in Europe, North America or a Japanese brand that enjoys “good market share” overseas, Geng wrote.

Lenovo’s first-quarter profit rose 30 percent to US$141.4 million, beating analysts’ estimates, as it expanded market share globally.

Sales of PCs are expected to expand 0.9 percent this year to 367 million units. Tablet sales should increase 54 percent to 107 million and smartphones may rise 39 percent to 686 million, according to a forecast by IDC.

Competition from tablets and smartphones may put that 1 percent PC growth at risk, Bloomberg Industries analyst Anand Srinivasan said.

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