Lenovo ready to buy way into new mobile market
Computer giant says it will consider purchases to overcome weaknesses and drive growth
Bloomberg in Beijing
Lenovo, the world's second-biggest personal computer maker, will consider acquisitions to drive growth and build know-how as it expands into new areas such as mobile devices.
"We would fully leverage this tool if the target is consistent with our strategy," chief executive Yang Yuanqing said.
"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 in global computer shipments, Yang is looking at ways to sustain the fastest annual pace in sales growth in six years. The company, which overtook Apple in the three months to June for second place in smartphone sales in China, would introduce 40 phone models in the year started April 1, Yang said.
"The mobile business, tablets and smartphones, is crucial for its long-term outlook, given the slowdown of global PC demand," Yuanta Securities analyst Vincent Chen said.
Lenovo, which bought IBM's PC division in 2005, boosted sales last year by buying control of Medion, a German computer maker; and the PC unit of NEC. Sales rose 37 per cent to US$29.6 billion in the year ended March 31, the fastest rate since the 12 months ended March 2006.
Now, Yang is stepping up development of smartphones, tablets, and internet-ready televisions to widen the company's offerings, following Apple and Samsung Electronics. Yang declined to comment on specific potential acquisitions.
Yang said Lenovo would introduce a wider array of phone models this fiscal year, making its strategy very different from a company like Apple that relied on the iPhone.
"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 21/2 years ago in China, would 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", he added.
Lenovo overtook Apple during the second quarter for second place in smartphone sales in China, the world's largest handset market.
Lenovo jumped from seventh place in the first quarter to claim 11 per cent of China's smartphone sales in the three months ended June, market researcher IDC said. Apple's share fell to 10 per cent from 19 per cent.
Both trailed leader Samsung's 19 per cent share, IDC said.