Bottom line: Lenovo has done remarkably well since defying skeptics with its landmark IBM PC buy a decade ago, and could stand a 50-50 chance of remaining relevant a decade from now in the fast-changing world of high-tech gadgets.
Lenovo celebrates a decade since landmark IBM buy
Global PC leader Lenovo (HKEx: 992) is commending itself on how far it has come since its landmark purchase of IBM’s (NYSE: IBM) PC business 10 years ago, setting it on a path that has made it the world’s top computer seller. (company announcement) I’ll admit I was a skeptic at the time of the IBM deal in 2005, and have become much more bullish on Lenovo since then. Still, the company hasn’t completely convinced me that it has the necessary skill and vision to move past its global PC crown, which is fast becoming yesterday’s news as traditional computers rapidly lose ground to newer devices like smartphones and tablets.
Before I look at the challenges that Lenovo is facing, I want to start by personally congratulating the company on its huge accomplishments over the last decade since it announced it would purchase IBM’s storied PC business for $1.25 billion. I and many others predicted at the time that Lenovo could stumble badly with the move, since it had no experience at running such a major foreign business that was clearly in decline and need of restructuring. Read Full Post…
The following press releases and media reports about Chinese companies were carried on April 28. To view a full article or story, click on the link next to the headline.
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iPhone Sales, China Boosts Apple (Nasdaq: AAPL); Shares Up Modestly (English article)
Lenovo (HKEx: 992) Eyes 100 Mln Cellphone Sales In New Fiscal Year – CEO (Chinese article)
Huawei CEO Says Chinese Cybersecurity Rules Could Backfire (English article)
Trina (NYSE: TSL) Signs Agreement In Hefei Zone for 300 MW DG Solar Power Plant (PRNewswire)
Bottom line: China is likely to become Apple’s largest smartphone market by next year, while Huawei’s smartphones could make significant gains in the next 2 years en route to becoming one of the world’s top 2 brands.
iPhone posts China milestone
Three of the world’s top cellphone makers are in China-related headlines today, led by word that Chinese iPhone sales officially passed the US for the first time in Apple’s (Nasdaq: AAPL) latest reporting quarter. At the same time, 2 of China’s own homegrown cellphone makers with big aspirations are also in the headlines, with both Huawei and Lenovo (HKEx: 992) discussing their goals for the next few years.
One of those has Huawei’s smartphone chief saying he’s aiming to become the world’s largest brand within the next 3-5 years. The other has Lenovo’s chief executive saying he’s aiming to sell 100 million cellphones in the company’s latest fiscal year, as it consolidates its position after a period of rapid expansion. Read Full Post…
The following press releases and media reports about Chinese companies were carried on April 23. To view a full article or story, click on the link next to the headline.
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Visa (NYSE: V), MasterCard (NYSE: MA) Surge On China Move To End Card Monopoly (English article)
Chinese Banks Disobey Order To Support Housing Market (English article)
Bottom line: Legend Group’s IPO should get a solid reception, and Alibaba’s separately listed drug and film units should also perform well over the next few years as the Hong Kong stock exchange gains popularity for China tech firms.
Legend makes first public filing for HK IPO
A pair of stories today are casting a spotlight on Hong Kong and its future potential as a hotbed for Chinese tech listings. One of those involves e-commerce leader Alibaba (NYSE: BABA), which wanted to make its record-breaking IPO in Hong Kong last year but ultimately chose New York due to ownership issues. The second involves Legend Holdings, parent of PC giant Lenovo (HKEx: 992), and one of China’s oldest and most respected private tech companies.
The first news bit has Alibaba injecting the pharmacy business from its popular Tmall online shopping mall into its Hong Kong-listed Alibaba Health (HKEx: 241) unit. The second has Legend Holdings making its first public filing for a long-planned listing in Hong Kong that should happen later this year, including some of the first official financials we’ve seen for the IPO. Read Full Post…
The following press releases and media reports about Chinese companies were carried on April 16. To view a full article or story, click on the link next to the headline.
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Legend Group Files For Hong Kong IPO, 2014 Profit Reaches 4.1 Bln Yuan (Chinese article)
Alibaba Injects $2.5 Bln Online Pharmacy Business Into Alibaba Health (HKEx: 241) (English article)
Bottom line: The move by Yahoo’s former China R&D chief to a major local Internet firm reflects growing work opportunities at Chinese companies, and waning attraction of China as an R&D center for big multinationals.
Former Yahoo R&D exec joins JD.com
A new move by a leading R&D executive is spotlighting a pair of major trends in China’s high-tech space, led by rapidly falling expectations for the market by big multinationals. The actual move has seen the former head of Yahoo’s (Nasdaq: YHOO) China R&D center take a new job at JD.com (Nasdaq: JD), China’s second largest e-commerce company, just weeks after Yahoo closed one of its last remaining Chinese operations. That move also highlights the growing attractiveness of big domestic companies for top R&D executives, who used to eschew such homegrown firms. Read Full Post…
Bottom line: Tsinghua Unigroup’s pending purchase of a controlling stake in H3C could mark the start of a new partnership with HP in routers, but is unlikely to affect its older partnership with Intel in the telecoms chips.
HP eyes router stake sale to Unigroup
Semiconductor company Tsinghua Unigroup was already a name to watch after a string of major deals last year including a tie-up with Intel (Nasdaq: INTC), and now it’s adding to its allure with word of a major new alliance with Hewlett-Packard (NYSE: HPQ). This latest deal would trump the earlier one from Intel in size, and would see Unigroup buy a controlling 51 percent stake of HP’s China-based H3C unit, which makes routers and switches that compete with US giant Cisco (Nasdaq: CSCO).
It’s not completely clear how much Unigroup would pay for the stake, though the amount would almost certainly be more than the $1.5 billion that Intel paid last year for 20 percent of a new company that Unigroup created through its merger of 2 of China’s leading telecoms chip designers. I’m no telecoms expert, but I’ll admit this latest deal is leaving me just a bit puzzled due to the very different natures of the businesses of H3C and the earlier tie-up involving Intel, which revolved around telecoms microchips. Read Full Post…
The following press releases and media reports about Chinese companies were carried on March 20. To view a full article or story, click on the link next to the headline.
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China Mobile (HKEx: 941) Reports 2014 Profit Of 109 Bln Yuan, Down 10 Pct (Chinese article)
Coolpad (HKEx: 2369), Qihoo 360 (NYSE: QIHU) To Roll Out Own Mobile OS (Chinese article)
Lenovo (HKEx: 992) Names Gianfranco Lanci As Company President (HKEx announcement)
Ctrip (Nasdaq: CTRP) Reports Unaudited Q4 And Full Year 2014 Results (PRNewswire)
Bottom line: Huawei’s massive spending at the world’s biggest telecoms show this week hints at its determination to make big inroads in Europe and the US this year for its older networking equipment and newer smartphone businesses.
Huawei spends millions at big telecoms show
In between running from interview to interview at the world’s largest telecoms show this week in Barcelona, I managed to scribble down some notes on which Chinese firms were spending the most heavily at this year’s Mobile World Congress (MWC). Such spending hints at company priorities for the year ahead, including which markets they are targeting. In this case it’s worth noting that MWC is largely a show for customers from North America and especially Europe, so anyone who attends as an exhibitor is almost certainly eying those markets.
All that said, it should come as no surprise that telecoms giants Huawei and ZTE (HKEx: 763; Shenzhen: 000063) were the 2 biggest spenders among Chinese firms at this year’s show, based on my own analysis. PC giant and smartphone aspirant Lenovo (HKEx: 992) was the only other Chinese firm with major representation. But perhaps most surprising was the size of Huawei’s presence, which easily dwarfed both ZTE and Lenovo. Read Full Post…
Bottom line: Lenovo could make significant inroads into western smartphone markets with its newly acquired Motorola if it lets the brand remain independent and maintain its own product development and sales resources.
Lenovo struts phones at trade show
A tour of the Lenovo (HKEx: 9992) booth at a major trade show happening this week in Spain made me realize just how much the company is betting on its recently purchased Motorola brand to boost it into the smartphone big leagues. Motorola’s continuing attraction as a powerful brand was on full display at the Lenovo booth, with large crowds clamoring for a look at what seemed like quite a ho-hum new low-end model being rolled out at the show.
By comparison, a glitzy new Lenovo-brand model from its higher-end VIBE line was drawing far less attention, even as a Brit on the stage sang on with nonstop praises for the unique features of the new model that has many attributes of a high-end camera. Read Full Post…
