Lenovo Group is a Chinese technology group whose products include PCs, tablet computers, mobile phones, servers, computers, tablet computers, mobile phones, workstations, servers, electronic storage devices, IT management software and smart TVs. Lenovo is the world’s second-largest PC vendor by 2011 market share (after Hewlett-Packard) and markets the ThinkPad line of notebook computers. Originally known as “Legend”, it changed its name to help international development. Lenovo bought IBM’s personal computer business in 2005and has maintained a substantial research and development presence in North Carolina.
Lenovo shares fall after NEC unloads its stake
Lenovo sees its share price tumble more than 8 per cent as Japan's cash-strapped NEC sells off its entire stake in the firm for 18 billion yen
Lenovo saw its share price tumble by more than 8 per cent yesterday after Japan's NEC sold off its entire shareholding in the Chinese technology giant.
Cash-strapped NEC, which makes computers and telecommunications equipment and provides information-technology services, unloaded its 2.8 per cent stake in Lenovo to mostly institutional investors in a transaction worth 18 billion yen (HK$1.78 billion).
Lenovo, the world's second-largest supplier of personal computers, issued 281.1 million shares worth about US$175 million in July last year to take a 51 per cent stake in a joint venture formed by the two companies. Their venture, NEC Lenovo Japan Group, is the country's market leader in personal computer sales.
Hong Kong-listed Lenovo on Tuesday waived the two-year lock-up restriction on those shares, which allowed NEC to pursue the sale to meet its financing needs. That resulted in Lenovo's share price falling as much as 8.2 per cent in early trading yesterday, its steepest drop in more than two months. It closed at HK$6.12, down 7.55 per cent.
"NEC saw the opportunity to make a tidy profit and they took it," Bernstein Research senior analyst Alberto Moel said. "NEC can certainly use the cash."
In January, NEC announced a restructuring that involved 10,000 job cuts after the company forecast its third annual loss in four years. The Tokyo-based company, which saw an estimated 4 billion yen gain from the sale of its Lenovo shares, reported a 110.3 billion yen net loss in its fiscal year ended March 31.
"In reality, NEC could sell those shares after two years anyway as per contract. All we have done is to let them do it 10 months earlier. This has no bearing on our joint venture," Roderick Lappin, a vice-president at and the executive chairman of Lenovo NEC Holdings, told Reuters. NEC Lenovo Japan Group has maintained the partners' respective brands and sells products through their existing distribution channels.
Lenovo, which operates in more than 160 countries, has continued to defy the sluggish global economy. It forecast growth in personal computer and smartphone sales this year.
Separately, Lenovo announced last night that Lenovo Brazil, its wholly owned Brazilian subsidiary, had yesterday acquired three Brazilian companies for a total of 300 million real (HK$1.14 billion).
These three Brazilian companies - Digibras Industria Do Brasil, Digiboard Eletronica Da Amazonia, and Dual Mix Comercio De Eletronicos - are collectively one of the largest manufacturers of consumer electronics in the Latin American nation.
Additional reporting by Toh Han Shih