Pressure mounts for Lenovo after Microsoft-Nokia deal

Investors may cast a bearish eye over the prospects of Lenovo after Microsoft's €5.4 billion (HK$55.2 billion) takeover of Nokia's devices and services business, which leaves the mainland computer giant looking isolated as a top smartphone supplier without its own dedicated software platform.

"The impact [of the Microsoft-Nokia deal] on Lenovo is short-term neutral - on the downside," Alberto Moel, a senior analyst at Bernstein Research, said yesterday.

Lenovo saw its shares inch up 0.79 per cent yesterday to close at HK$7.61. The stock has underperformed, despite the company's record earnings in the past quarter as well as its climb to become the world's largest personal computer supplier and fourth-biggest smartphone vendor.

Moel said the acquisition of Nokia's devices and services business "puts into question the Lenovo-Microsoft collaboration on Windows phones, which has been a source of free research and development to Lenovo".

He warned that Lenovo could be affected if Microsoft used its Nokia-branded phones to double down on smartphones and "focuses on market segments where Lenovo competes".

Sandy Shen, Gartner's research director for consumer services, said Nokia's brand was still strong in Europe and Asia.