Lenovo Group has agreed to transfer its non-telecoms information technology services business to AsiaInfo Holdings, an IT solutions provider in China, as part of a new strategic alliance.
The transaction, valued at US$36.3 million, will merge Lenovo's IT services division with Nasdaq-listed AsiaInfo's enterprise information solutions unit to form Lenovo-AsiaInfo. It is expected to boost AsiaInfo's net revenues by 40 to 50 per cent.
The move by China's largest personal computer retailer may signal its plan to offload its non-core assets, allowing it to focus on stemming the erosion of its regional PC market share to foreign rivals.
Three years ago, Lenovo attempted to transform itself from a PC manufacturer into an IT services firm modelled after IBM, but the effort has yet to pay off.
Lenovo's IT services division generated US$29.6 million, or 2.4 per cent, of the PC maker's total revenue in the fiscal year ended March 31. It commands a paltry 3.5 per cent of the Chinese market, behind IBM at 11 per cent and Hewlett-Packard at 8 per cent.
Asked whether the sale showed Lenovo's IT services business model had failed, BNP Paribas analyst Marvin Lo said it was hard to be sure.
'It's a very competitive market - there are lots of companies involved,' Mr Lo said. 'Lenovo didn't have much of a history in IT services. One of the key things you need in that industry is a proven track record.'
