Lenovo sees scale helping turn around former Motorola, IBM server businesses

In its most extensive corporate restructuring since 2005, Lenovo Group plans to speed up the integration of its two biggest-ever acquisitions - Motorola Mobility and IBM's former x86 server business - and transform them into profitable operations.

"We hope that our commitment to turn around these businesses in four to six quarters will prove to be conservative," Yang Yuanqing, the chairman and chief executive of Lenovo, told the South China Morning Post yesterday.

Analysts regard Lenovo as well-experienced in overcoming the challenges of integrating unprofitable businesses and steadily turning them around.

It started with the US$1.75 billion takeover of IBM's money-losing personal computer division in 2005, which enabled the mainland company to expand its reach into more than 160 nations.

By June last year, Lenovo firmly overtook perennial global market leader Hewlett-Packard to become the world's largest supplier of personal computers and the most profitable player in an industry that is in decline.

"Lenovo has been very successful in riding herd on this endgame, capturing share and expanding margins," said Alberto Moel, a senior analyst at Bernstein Research, in a report.

It is a formula that Lenovo is widely expected to adopt again after recently closing its US$2.91 billion purchase of the Motorola smartphone operation from Google and US$2.1 billion takeover of IBM's commodity server business.