Even as Lenovo Group's (
"The acquisition is a definite win for Lenovo," International Data Corp (IDC), a Framingham, Massachusetts-based research institute, said in a report released yesterday.
Benefits
"With its acquisition of IBM's PCD [Personal Computing Division] Group, Lenovo gains access to regions outside of China with a well-respected business partner and a highly established brand," IDC said.
Lenovo, however, will face three challenges: a lack of brand recognition outside its home market, the need to match aggressive pricing in the PC market, and integration issues, including cultural issues as the US and Asian entities merge, IDC said.
Those concerns loomed large yesterday, at least, as investors and analysts appeared to be have a less confident view of the company's future.
Investor Concerns
Lenovo's shares fell yesterday on the first day of trade since the company announced the US$1.75 billion purchase of Big Blue's PC business. Trade had been suspended for the three days previous while the deal was in the works.
The shares fell by as much as 7.48 percent to HK$2.475 before recovering slightly to close at HK$2.575, a drop of 3.74 percent.
"Computers are a sunset industry," said Trevor Cheung, strategist at Singapore-headquartered DBS Vickers Securities.
"We're quite skeptical about the deal. Lenovo has not shown a good track record in assimilation in business development," he said.
JP Morgan Chase & Co also expressed concern over the deal, saying it may take time for Lenovo to merge its business with IBM's.
The purchase is "a bold but risky move," Johnny Chan, a JP Morgan analyst, wrote in a report yesterday. IBM's business "has dipped frequently into the red," he wrote.
Effects in Taiwan
In Taiwan, the Lenovo-IBM deal may deal a heavy blow to Taiwan's information technology industry. Analysts said the impact will be comprehensive over the long term.
While short-term effects are not expected to be serious, as IBM's orders to Taiwan contractors are already due, analysts said that the long-term impact will be unavoidably severe -- with secondary companies being hurt the most.
Second-tier firms could face a loss of contracts and lower gross margins given Lenovo's greater scale and increased bargaining power.
Motherboard Makers
On Taiwan's bourse, share prices of two major motherboard makers -- Elitegroup Computer Systems Co (
EliteGroup surged 6.9 percent to NT$17.1 and Micro-Star rose 6.8 percent to NT$20.4.
Current suppliers for IBM acknowledged that the negative elements of the deal outnumber the positive effects for them. Shares in Wistron Corp (
Also see story:
BIG BUCKS: Chairman Wei is expected to receive NT$34.12 million on a proposed NT$5 cash dividend plan, while the National Development Fund would get NT$8.27 billion Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday announced that its board of directors approved US$15.25 billion in capital appropriations for long-term expansion to meet growing demand. The funds are to be used for installing advanced technology and packaging capacity, expanding mature and specialty technology, and constructing fabs with facility systems, TSMC said in a statement. The board also approved a proposal to distribute a NT$5 cash dividend per share, based on first-quarter earnings per share of NT$13.94, it said. That surpasses the NT$4.50 dividend for the fourth quarter of last year. TSMC has said that while it is eager
‘IMMENSE SWAY’: The top 50 companies, based on market cap, shape everything from technology to consumer trends, advisory firm Visual Capitalist said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) was ranked the 10th-most valuable company globally this year, market information advisory firm Visual Capitalist said. TSMC sat on a market cap of about US$915 billion as of Monday last week, making it the 10th-most valuable company in the world and No. 1 in Asia, the publisher said in its “50 Most Valuable Companies in the World” list. Visual Capitalist described TSMC as the world’s largest dedicated semiconductor foundry operator that rolls out chips for major tech names such as US consumer electronics brand Apple Inc, and artificial intelligence (AI) chip designers Nvidia Corp and Advanced
Saudi Arabian Oil Co (Aramco), the Saudi state-owned oil giant, yesterday posted first-quarter profits of US$26 billion, down 4.6 percent from the prior year as falling global oil prices undermine the kingdom’s multitrillion-dollar development plans. Aramco had revenues of US$108.1 billion over the quarter, the company reported in a filing on Riyadh’s Tadawul stock exchange. The company saw US$107.2 billion in revenues and profits of US$27.2 billion for the same period last year. Saudi Arabia has promised to invest US$600 billion in the US over the course of US President Donald Trump’s second term. Trump, who is set to touch
SKEPTICAL: An economist said it is possible US and Chinese officials would walk away from the meeting saying talks were productive, without reducing tariffs at all US President Donald Trump hailed a “total reset” in US-China trade relations, ahead of a second day of talks yesterday between top officials from Washington and Beijing aimed at de-escalating trade tensions sparked by his aggressive tariff rollout. In a Truth Social post early yesterday, Trump praised the “very good” discussions and deemed them “a total reset negotiated in a friendly, but constructive, manner.” The second day of closed-door meetings between US Secretary of the Treasury Scott Bessent, US Trade Representative Jamieson Greer and Chinese Vice Premier He Lifeng (何立峰) were due to restart yesterday morning, said a person familiar
RSS