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News Digest: December 2, 2011

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The following press releases and media reports about Chinese companies were carried on December 2. To view a full article or story, click on the link next to the headline.

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◙ Hua Hong NEC, Grace Close To Merger – Sources (English article)

◙ Sina-Invested (Nasdaq: SINA) Mecox Lane (Nasdaq: MCOX) Reports $14.4 Mln Q3 Loss (Chinese article)

◙ Sina (Nasdaq: SINA) Weibo Launches Voluntary Real Name System (English article)

◙ NetEase’s (Nasdaq: NTES) Board Approves New Share Repurchase Program (PRNewswire)

◙ Lenovo (HKEx: 992) To Launch Windows-Based Smartphone Next Year (Chinese article)

Liu Steps Down at Lenovo — Again 柳传志再度卸任联想董事会主席

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China’s business world is fast becoming the land of deja vu, at least from my perspective. Just a day after Apple (Nasdaq: AAPL) snubbed China for a second time by excluding the country from its international launch list for its  latest hot product (previous post), PC powerhouse Lenovo (HKEx: 992) has announced that co-founder Liu Chuanzhi is stepping down as chairman for a second time. (company announcement) But the deja vu doesn’t end there. Not only is Liu stepping down a second time, but his heir apparent is Yang Yuanqing, who also took over the chairmanship the first time Liu stepped down shortly after his company’s historic purchase of IBM’s (NYSE: IBM) PC assets in 2005. My question is: if Yang couldn’t succeed the first time, which prompted Liu to return to the chairmanship in 2009, then why does Liu suddenly think he will succeed now? In all fairness, things are a little different this time around. The last time Yang was named chairman, an American, Bill Amelio, was also brought in as CEO to help Lenovo digest its then newly-purchased IBM business. That combination proved too difficult for Lenovo, which incurred losses and underwent a major restructuring that prompted Liu to return as chairman in 2009. This time around, Lenovo has also just posted very nice earnings that saw its profit surge 88 percent in its latest quarter (English article), partly due to recent acquisitions in Germany and Japan, as it zoomed past Dell (Nasdaq: DELL) to become the world’s second biggest PC seller, behind only Hewlett-Packard (NYSE: HPQ). But those new acquisitions also look very much like the IBM purchase, in that both are in mature Western markets, which have been a difficult area for Lenovo in the past. I would like to think that Yang could succeed this time and Liu, now in his 70s, can permanently retire. But I sense that Yang’s return will signal more rocky times ahead, with earnings likely to take a hit as Lenovo stumbles in trying to integrate its Western acquisitions and grab more global market share.

Bottom line: Liu Chuanzhi’s departure as chairman of Lenovo for a second time signals a rocky period ahead for the company.

Related postings 相关文章:

◙ Lenovo Takes Backward Step With Compal JV 联想和仁宝合资建厂为倒退举动

◙ Acer Trips, Lenovo Next? 联想应避免重蹈宏基覆辙

◙ Huawei, Lenovo Look to Foreign Advisors in Westward Drive

News Digest: November 3, 2011

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The following press releases and media reports about Chinese companies were carried on November 3. To view a full article or story, click on the link next to the headline.

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◙ ZTE (HKEx: 763) Ranks Fourth in Q3 2011 Global Handset Shipments (English article)

◙ Lenovo (HKEx: 992) Q2 Profit Up 88 Percent, Beats Forecast (English article)

◙ China Telecom (HKEx: 728) Names Yang Jie as New CEO of Listed Company (Chinese article)

◙ China Mobile (HKEx: 941) Ends Talks With Apple (Nasdaq: AAPL) For TD-SCDMA iPhone (Chinese article)

◙ China Power in $784 million JV with China Coal (English article)

News Digest: October 13, 2011

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The following press releases and media reports about Chinese companies were carried on October 13. To view a full article or story, click on the link next to the headline.

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◙ Lenovo (HKEx: 992) Passes Dell (Nasdaq: DELL) To Become Global No. 2 PC Seller in Q3 (Chinese article)

◙ Taobao Mall Stores Flooded with Malicious False Orders – Source (English article)

◙ Saab Receives Loan Money From Youngman: Paper (English article)

◙ Hyatt (NYSE: H) Introduces Hyatt Place, Hyatt House in Asia with 3 Shanghai Hotels (Businesswire)

◙ Two Wal-Mart (NYSE: WMT) Workers Arrested in Chinese Organic-Pork Probe (English article)

Lenovo Parent Goes Down to the Farm 联想控股“务农” 瓶装水里淘金

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While leading Chinese PC maker Lenovo (HKEx: 992) focuses on its core computer business, its parent, Legend Holdings, seems intent on a strange diversification campaign in the run-up to its own IPO that could come in the next 3-4 years. That seems to be the message with the latest series of Chinese media reports that Legend sees long-term potential in both the agriculture (Chinese article) and bottled water (Chinese article) businesses. These latest initiatives come not long after Lenovo founder Liu Chuanzhi, who never seems content to focus on the PC business he co-founded more than 2 decades ago in Beijing, said his company will also explore possibilities in the hotel business. (previous post) I’ll give Liu credit for limiting these strange new initiatives to his parent company rather than putting them into the listed Lenovo, where they could hurt earnings and divert attention from the company’s core technology business. At the same time, however, these disparate new initiatives don’t seem particularly related to anything Liu has done before, and therefore I would seriously question how much they could contribute to Legend Holdings, which Liu has said on several occasions will seek a public listing as soon as 2014. I understand that Liu wants to differentiate Legend from Lenovo, as investors won’t have much reason to buy shares in the newly listed Legend if its business profile looks identical to the listed Lenovo. But rather than look to completely green fields like agriculture and hotels where it has little or no experience, Liu should focus on growing related areas of the company, such as its interesting Hony Capital unit, a venture capital style firm that focuses on financing for up-and-coming technology firms, or its recently formed gaming console business. Those offer a much better chance for synergies and success than these unrelated areas that may also have big growth prospects but will face uphill climbs due to Legend’s own lack of experience in the areas.

Bottom line: Diversification plans by Lenovo parent Legend Holdings into fields completely unrelated to its core tech business look misguided, with a big chance for failure.

Related postings 相关文章:

◙ Lenovo Lodges? Perhaps, Says Liu 联想进军酒店业？

◙ Lenovo Takes Backward Step With Compal JV 联想和仁宝合资建厂为倒退举动

◙ Huawei, Lenovo Look to Foreign Advisors in Westward Drive

News Digest: October 11, 2011

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The following press releases and media reports about Chinese companies were carried on October 11. To view a full article or story, click on the link next to the headline.

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◙ China State Investor Buys Shares in Four Biggest Banks as Valuations Slump (English article)

◙ Alibaba Said to Seek Temasek Financing to Buy Yahoo’s 40% Stake in Itself (English article)

◙ Rumor: TD-LTE Trials Stalled in Two Cities (English article; Chinese article)

◙ Lenovo (HKEx: 992) Delays Internet TVs Due to Regulatory Difficulties (English article)

◙ Yingli Green Energy (NYSE: YGE) Announces New and Improved Warranty Terms (PRNewswire)

News Digest: September 29 2011

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The following press releases and media reports about Chinese companies were carried on September 29. To view a full article or story, click on the link next to the headline.

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◙ 55tuan Begins Massive Layoffs, Up to 70 Percent (Chinese article)

◙ Citic Securities (Shanghai: 600030) Sale Said to Raise $1.7 Bln, Less Than Sought (English article)

◙ Camelot Information Systems (NYSE: CIS) Revises Outlook for Q3 and Full-Year (PRNewswire)

◙ Suntech (NYSE: STP) Sees China Gaining From Falling Solar Prices (English article)

◙ Nobuyuki Idei Joins Lenovo (HKEx: 992) Board of Directors (Businesswire)

Lenovo Takes Backward Step With Compal JV 联想和仁宝合资建厂为倒退举动

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Investors must see something I’m missing in Lenovo’s (HKEx: 992) newly announced $300 million joint venture with Taiwanese contract PC manufacturer Compal (Taipei: 2324). That’s the only reason I can find for an 11 percent jump in Lenovo’s stock on Tuesday after it announced the deal, which will see it pair with one of Taiwan’s top contract PC makers in a new manufacturing tie-up. To me, this deal looks more like a step backward than a positive new development, and goes in the opposite  direction of global industry trends. First let’s review the facts: under their new deal, the companies will invest the $300 million to build a PC manufacturing plant in the Chinese city of Hefei. Presumably the plant will exclusively supply PCs to Lenovo, which recently passed Taiwan’s Acer (Taipei: 2353) to become the world’s third largest PC seller (previous post) and said it aims to take the number-two spot from Dell (Nasdaq: DELL) by the end of the year. The only problem with this latest joint venture plan is that it completely goes against a much bigger industry trend that has seen most of the world’s major electronics makers, including names like Apple (Nasdaq: AAPL), Dell and Hewlett-Packard (NYSE: HPQ) sell off most of their PC-building assets in the last 10 years and outsource the work to specialist contract manufactures, mostly in Taiwan, like Compal and Hon Hai (Taipei: 2317). The trend occurred to let the big brands focus on marketing and sales, while giving them the flexibility to use one or more of the contract manufacturers depending on their needs in an increasingly competitive global marketplace. For Lenovo to get back into the manufacturing business completely contradicts all these latest industry trends, and I see little or no advantage in this move. My only guess as to why the market got so excited over the news is that perhaps investors believe that with this new project now on its plate, Lenovo will be less likely to make a foolish bid for HP’s PC assets, which would be much more disastrous for Lenovo than this relatively small new investment with Compal.

Bottom line: Lenovo’s new PC manufacturing joint venture with Compal makes little or no sense, and is an unneeded distraction as it aims to take the world’s No. 2 PC spot from Dell.

联想(0992.HK)周二宣布，将与台湾PC代工厂商仁宝(2324.TW)共建规模达3亿美元的合资公司，这项交易中，定有投资者发现了而我却错过的东西。联想股价在周二交易宣布後大涨11%，这是我唯一能想到的原因。合资建厂交易，将令联想和台湾PC代工大厂结成新的生产联盟。但依我看，这项交易更像是倒退了一步，而非向前的新发展，与全球PC行业发展趋势也是背道而驰。首先，我们来回顾一些事实。按照此交易，联想和仁宝将斥资3亿美元在合肥建PC制造厂。联想近期超越台湾宏基(2353.TW)，成为世界第三大PC厂商，并称其目标是到年底取代戴尔(DELL.O)成为世界第二大PC厂商。新合资工厂将只向联想供应PC产品，这项合资计划里面唯一的问题是，这种做法与行业大趋势完全背道而驰。过去10年中，苹果(AAPL.O: 行情)、戴尔和惠普(HPQ.N)等一些世界电子行业巨头纷纷出售各自PC制造资产，并将PC生产工作外包给仁宝和鸿海(2317.TW: 行情)等专业代工商。这种趋势让大公司更多地专注于市场营销，同时在日益激烈的全球竞争中给他们带来灵活性，可以根据需求选择一家或多家代工厂商。联想重返制造业务，完全违背了这些最新行业趋势，我认为此举鲜有或根本没有优势可言。市场为何对此消息如此兴奋，我唯一的猜测的是，投资者可能认为联想有了这一新项目，愚蠢的竞购惠普PC资产的可能性会更小。与这项和仁宝的相对较小规模的投资相比，竞购惠普PC资产会带来更大灾难。

一句话：联想和仁宝合资建厂几乎无意义可言，对超越戴尔成为世界第二大PC厂商的目标来说，也是节外生枝。

Related postings 相关文章:

◙ Acer Trips, Lenovo Next? 联想应避免重蹈宏基覆辙

◙ HP’s Mobile OS Looks Hot for Lenovo, HTC 联想和HTC似将发动惠普资产竞购战

◙ Lenovo Sets Sights on Russia, Style 联想进军俄罗斯市场，研发时尚型PC

News Digest: September 24-26, 2011

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The following press releases and media reports about Chinese companies were carried on September 24-26. To view a full article or story, click on the link next to the headline.

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◙ China Communications Construction eyes $3.1 billion Shanghai IPO (English article)

◙ Lenovo (HKEx: 992) Lowers Price on A1 Tablet PC to 1,000 Yuan, May Start Price War (Chinese article)

◙ Dangdang (NYSE: DANG) Announces Fulfillment Developments, New Head of Technology (PRNewswire)

◙ ZTE (HKEx: 763; Shenzhen: 000063) Officially Launches Skate 4.3-Inch Smartphone Globally (Businesswire)

◙ Silvercorp (NYSE: SVM) Sues Chinastockwatch.com Alleging Attempt to Drive Down Shares (English article)

Acer Trips, Lenovo Next? 联想应避免重蹈宏基覆辙

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The folks at Lenovo (HKEx: 992) are surely celebrating, after the latest numbers showed it zoomed past sputtering Taiwanese PC maker Acer (Taipei: 2353) to take the spot as the world’s third largest PC seller in the second quarter. (Chinese article) But before they celebrate too much, I would advise Lenovo’s leaders to take a good look at what happened to Acer to avoid a similar fate of the former high-flyer. First let’s look at the numbers. According to iSuppli, Lenovo’s PC shipments soared 23 percent in the second quarter from a year earlier, giving it 12 percent of the world’s PC market. That was more than enough to lift it past Acer, whose shipments plummeted 20 percent to give it just over 10 percent of the global PC market. Acer’s story is relatively well known, as its low-price strategy to grab share in tough Western markets from better run rivals Dell (Nasdaq: DELL) and Hewlett Packard (NYSE: HPQ) ultimately backfired and drove the company’s bottom line into the red. Lenovo has seen its sales soar in large part due to its earlier decision to focus on emerging markets, drawing on expertise gained in its home in China where it controls more than a quarter of the market. But it has shown a worrisome tendency recently to buy dying Western computer makers, picking up Germany’s Medion (previous post) and taking over NEC’s (Tokyo: 6701) PC business in Japan (previous post), much the way Acer took over the dying Gateway brand in the US in 2007. Recent signals from Lenovo’s acquisition-happy Chairman Liu Chuanzhi indicated he was strongly considering a bid for HP’s PC business, which HP is trying to sel. But Liu later backed off and said Lenovo wouldn’t enter the race. If true, that would be a smart move for Lenovo, which should focus on integrating its Japanese and German acquisitions and building its emerging markets business to avoid following in Acer’s footsteps.

Bottom line: Lenovo needs to study the case of Acer and avoid overly aggressive ambitions in Western markets to avoid repeating Acer’s recent rapid fall from grace.

联想(0992.HK)员工一定在庆祝，公司第二季度超过宏基(2353.TW)成为全球第三大个人电脑（PC）厂商。但他们最好不要高兴过头，我建议，联想领导层应仔细审视宏基的经历，避免遭遇相同的命运。首先，来看看最新数据。市场研究公司iSuppli称，联想第二季度PC发货量同比增长23%，其全球市场份额增至12%。这使联想远远超过宏基，後者第二季度PC发货量下滑20%，全球市场份额仅略高于10%。宏基的故事相对广为人知。凭借低价策略，宏基从戴尔(DELL.O)和惠普(HPQ.N)手中抢得西方市场份额，但最终适得其反，导致宏基出现亏损。联想PC销量大涨，主要归因于早先侧重新兴市场的决策，并充分利用在国内积累的专业经验。联想占据国内PC市场逾四分之一份额。但联想收购德国Medion和日本NEC(6701.T)PC业务，这一趋势令人担忧，做法很像宏基2007年在美国收购濒临破产的Gateway。联想董事长柳传志稍早的讲话表明，有意竞购惠普打算出售的PC业务，但近期却打退堂鼓，称联想不会参与竞购。如果情况属实，可谓明智之举。联想应致力于整合上述两起并购，发展新兴市场业务，避免重蹈宏基的覆辙。

一句话：联想应以宏基为鉴，避免在西方市场过度扩张，再现宏基近期迅速下滑一幕。

Related postings 相关文章:

◙ Lenovo Sets Sights on Russia, Style 联想进军俄罗斯市场，研发时尚型PC

◙ Lenovo Considers Dangerous HP Computer Bid 联想应慎购惠普PC业务

◙ Lenovo Discovers the Right Formula a Little Too Late 联想再次“晚一步”

News Digest: September 22, 2011

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The following press releases and media reports about Chinese companies were carried on September 22. To view a full article or story, click on the link next to the headline.

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◙ Dangdang (NYSE: DANG) Plans 3C Price War Against 360Buy – Source (English article)

◙ Lenovo (HKEx: 992) Passes Acer (Taipei: 2353) As World’s Third Biggest PC Seller (Chinese article)

◙ Sino Agro Food Clears SEC Comments on its Form 10 Registration Statement (Businesswire)

◙ Baidu (Nasdaq: BIDU) Invests in Group Buying Cosmetics Site 36tuan – Source (Chinese article)

◙ Shanda’s (Nasdaq: SNDA) Ku6 Media (Nasdaq: KUTV) Quits Video, Tries SNS (Chinese article)