Lenovo’s Profit Rises After IBM Takeover
Here are some good news for IBM ThinkPad laptops fans (actually now are Lenovo ThinkPad laptops I think).
Bloomberg reports that Lenovo Group Ltd., China’s biggest computer maker, posted an unexpected gain in first-quarter profit after buying International Business Machines Corp.’s personal- computer business:
Net income rose to HK$357 million ($46 million), or 4.12 Hong Kong cents a share, in the three months ended June 30, from HK$336.8 million, or 4.50 cents, a year earlier. Stephen Ward, named chief executive of Beijing-based Lenovo after the April acquisition, said in a statement today that the new business returned to profit and helped sales more than triple.
Ward said the acquisition of the IBM unit, which had losses totaling $965 million from 2001 to the first half of last year, is already yielding cost benefits, including lower purchasing costs. The $1.25 billion takeover reduced Lenovo’s reliance on China, where competition with Dell Inc. pushed prices lower.
Some opinions:
“I’ve been pretty optimistic on them,” said Jean-Marc Champagne, an associate director of institutional sales at Sinopac Securities Asia Ltd. in Hong Kong. “They do things in a more cost-effective way than U.S. competitors.”
“We’re generating the anticipated benefits of the acquisition quickly, ahead of schedule,” Ward said. The acquired business “is very different from what it was under IBM.”
About the Lenovo – IBM takeover
Lenovo in March borrowed $600 million from a group of banks to help finance the IBM acquisition. It also assumed $500 million of debt as part of the purchase.
The takeover catapulted Lenovo past Hewlett-Packard as the largest PC seller in Asia-Pacific outside Japan, with 19 percent of the market in the second quarter to HP’s 12 percent, according to researcher IDC. Dell ranked third with a 9 percent market share.
The company interviewed 5,000 customers, 93 percent to 95 percent of whom were either “very comfortable” or at least neutral about remaining with Lenovo, Ward said.
Very interesting news. We hope ThinkPad laptops will remain the same good laptops and perhaps even better…
