Lenovo’s CEO Yang Yuanqing is back on the interview circuit, explaining more about how he thinks the company can turn around the financial trajectory of Motorola Mobility once the pending $2.91 billion dollar deal closes. According to Yang, a key part of Lenovo’s strategy will be to reintroduce the Motorola brand to China and emerging markets, which will enable Lenovo to turn a profit with Motorola “in a few quarters.”
Lenovo announced a 29 percent growth in profits today as the company expands its portfolio into new areas. Along with the acquisition of Motorola, Lenovo is also in the process of buying IBM’s low-end server unit in a $2.3 billion deal. The two acquisitions will help Lenovo offset a shrinking personal computer market that currently accounts for about 80% of the company’s sales. Lenovo is currently the number one vendor around the globe in the PC market and saw a bump of 6.6 percent in shipments in the fourth quarter of 2013 according to Gartner research. Despite that good news, the PC market fell to 2009 levels and projections indicate continued shrinkage will occur.
Along with diversifying their PC business by expanding into new geographic markets, Lenovo has been slowly building a smartphone business based on low-end devices like the Vibe X smartphone available in China. Lenovo shipped 13.9 million smartphones in the fourth quarter of 2013.
The purchase of Motorola will augment and expand those efforts. Motorola already has the Moto G device in their portfolio which will provide an easy path for Lenovo to bring the Motorola name to markets like China. Meanwhile, devices like the Moto X will enable the company to start to compete in premium markets, especially North American and European markets.
source: Bloomberg
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