I had a sense of deja vu on reading reports that a group of workers at an IBM (NYSE: IBM) plant in south China had gone on strike, unhappy about the terms of their transfer to domestic PC giant Lenovo (HKEx: 992) under a recent M&A deal. It seems the workers in the city of Shenzhen were offered similar pay and other terms under the transfer, which came as the result of Lenovo’s pending purchase of IBM’s low-end server business announced in January. But the workers were still unsatisfied, feeling they should get higher pay for agreeing to work at a domestic company rather than the more prestigious IBM. Read Full Post…
The following press releases and media reports about Chinese companies were carried on March 7. To view a full article or story, click on the link next to the headline.
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8 Companies Win Awards In First Round Of Unicom (HKEx: 762) 4G Tenders (Chinese article)
IBM China Workers Strike Over Terms In $2.3 Bln Lenovo (HKEx: 992) Deal (English article)
L’Oreal 2013 China Sales At $13.3 Bln, 13th Year Of Double-Digit Growth (Chinese article)
Dangdang (NYSE: DANG) Announces Resignation Of CFO (PRNewswire)
Huayi Bros (Shenzhen: 300027) Prepares To Go To Hollywood, Shares Halted (Chinese article)
Lenovo shares to come under pressure for next 2 years
Media have been buzzing these last few days about a Hong Kong stock exchange filing revealing that Google (Nasdaq: GOOG) has acquired 6 percent of Chinese PC giant Lenovo (HKEx: 992), implying the deal represents a vote of confidence by the world’s biggest Internet company in the world’s top PC seller. But anyone with any memory will recall that the transaction is just part of Lenovo’s payment for its recent purchase of Google’s Motorola cellphone division. What’s more, Google is almost certain to dump the stock once a lock-up period ends, putting pressure on Lenovo’s stock until that date arrives. Read Full Post…
Update: Shortly after writing this post, Sony has announced it will sell its Vaio unit to investment firm Japan Industrial Partners (JIP). I still believe that JIP could ultimately bring in Lenovo to help it operate the unit in a new joint venture or other tie-up.
Let’s begin my first post in the Year of the Horse with a look at PC giant Lenovo (HKEx: 992), which has suddenly gone into M&A overdrive with the latest word that it may be in talks to acquire Sony’s (Tokyo: 6753) PC business. I wrote just before the holiday that Lenovo might already be taking on too much with its $2.9 billion purchase of cellphone maker Motorola, which came late last month just a week after its $2.3 billion purchase of IBM’s (NYSE: IBM) low-end server business. (previous post) Individually each of these 3 deals actually look relatively smart, as all complement Lenovo’s existing businesses. But a single major acquisition is always tricky even in the best circumstances, and handling 3 such deals at the same time looks to me like a recipe for trouble. Read Full Post…
I commented last week that Lenovo (HKEx: 992) Chairman Yang Yuanqing didn’t seem extremely enthusiastic about his landmark deal to buy IBM’s (NYSE: IBM) low-end server business, and now perhaps we know why. It seems that as Yang was discussing that deal, the largest ever for Lenovo at the time, he was close to finalizing an even bigger purchase of Motorola, the faded former cellphone titan that was purchased by Google (Nasdaq: GOOG) in 2012. Lenovo is paying $2.9 billion for Motorola, a lofty price but still much less than the $12.5 billion Google paid just 2 years ago. That indicates to me that the company Lenovo is buying is probably just a shell of the Motorola that Google purchased, making the deal look somewhat questionable. Read Full Post…
While reading reports about Lenovo’s (HKEx: 992) new blockbuster deal to buy IBM’s (NYSE: IBM) low-end server business for $2.3 billion, I felt a strange and unusual lack of enthusiasm from Lenovo’s usually upbeat Chairman Yang Yuanqing. Yang never met a reporter he didn’t like, and he loves to talk about Lenovo’s big hopes and dreams at every opportunity he can get. Yet in the reports I read, this talkative chief executive was decidedly low-key and not extremely bullish on this new mega-deal, his company’s largest and the biggest ever tech acquisition by a Chinese firm. Perhaps that’s because he senses trouble ahead as his company tries to integrate and promote a business whose slowing growth was the main reason IBM desperately wanted to sell the unit. Read Full Post…
After more than a half year of silence, Lenovo’s (HKEx: 992) dream to buy the low-end server business of IBM (NYSE: IBM) is suddenly back in the headlines, in a development that I predicted quite a while ago based on the fact that both sides really want to do this deal. The first time around saw the talks founder and ultimately stall due to disagreement on price. But such a deal makes so much sense for both sides that it’s almost inevitable that it will happen, which leads me to believe that we could see announcement of a preliminary agreement sometime in the first or second quarter. Meantime, Lenovo is also seeing a positive development on the Japan front, where its 3-year-old PC joint venture with local partner NEC (Tokyo: 6701) is doing better than expected. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 21. To view a full article or story, click on the link next to the headline.
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Lenovo (HKEx: 992) Still Aims To Buy IBM (NYSE: IBM) Low-End Server Unit (Chinese article)
ZTE (HKEx: 763) Announces Preliminary Results For Year 2013 (HKEx announcement)
Peugeot Moves Closer To Dongfeng (HKEx: 489) Deal As Sales Sag (English article)
CNOOC (HKEx: 883) Announces 2014 Business Strategy, Development Plan (PRNewswire)
Game Operator Linekong Lands $80 Mln In Series C Funding (English article)
I don’t write too much about cloud services in China, mostly because I think the market is too immature despite Beijing’s strong promotion of the industry. Still, the latest announcement by e-commerce giant Amazon (Nasdaq: AMZN) that it’s formally launching cloud computing services in China seems like a good opportunity to re-examine the cloud phenomenon, including how the industry is likely to develop and who is best positioned to emerge as sector leaders. Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 19. To view a full article or story, click on the link next to the headline.
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Leading cellphone chipmaker Qualcomm (Nasdaq: QCOM) has become the latest foreign firm to encounter resistance in China following the Edward Snowden spying scandal, as Beijing shows it can also play the national security card to the detriment of big western tech firms. But in this case, the US chip giant is not only seeing sales to its Chinese customers drop, but is also facing scrutiny from China’s powerful state planner on allegations of monopolistic behavior. Both of these developments show that Beijing is quite capable of using the national security pretext to play tit-for-tat games with Washington, potentially costing US tech firms billions of dollars in lost China sales. Read Full Post…
