PC Archives ~ Business China : news for investors in China

PCs: Lenovo Blasted as Traitor for Supporting US Standard

By newsdoug on May 18, 2018

Bottom line: A brouhaha involving Lenovo’s branding as unpatriotic for not supporting homegrown technology is likely to blow over quickly, and spotlights China’s continued reliance on foreign technology.

In a story that looks like a something from the McCarthy era, embattled PC maker Lenovo (HKEx: 992) has landed at the center of a controversy that’s seeing it branded by some as a traitor for choosing foreign technology over a homegrown Chinese alternative. This kind of thing isn’t at all that uncommon in China, where politics, business and everyday life mix freely.

We’ve seen a few examples of such mixing over the last few months, all involving western companies that were forced to repent after making the egregious error of listing places like Hong Kong and Taiwan as separate “countries” from China on their marketing materials. Such missteps ended up causing outrage by some nationalists on the web, prompting sleepy regulators to step up and demand such places be labeled as part of China. I’m not a big fan of Donald Trump, though I did find his branding of this kind of thing as “Orwellian nonsense” as both humorous and also a nice gentle rebuke to China. Read Full Post…

PCs: Lenovo Kicked Out of Hang Seng Index

By newsdoug on May 7, 2018

Bottom line: Lenovo’s ejection from the Hang Seng Index caps its long fall from grace over the last four years, and leaves the company in an increasingly deep hole that may be hard to emerge from.

Capping its long fall from grace, PC giant Lenovo (HKEx: 992) has been officially booted from the Hang Seng Index, in a move that looks highly symbolic but also has some very real ramifications for this former high-flyer. It’s probably too early to relegate Lenovo to the history books, but we can certainly say the company is down for the count with this latest blow.

As someone who has followed Lenovo for most of its life as a listed company, I can provide my own view that the company is certainly facing a life-or-death moment in its lifetime that dates back more than three decades, making it one of China’s oldest tech names. I have called repeatedly for the departure of CEO Yang Yuanqing and introduction of some newer, younger blood to the company’s top ranks. But it doesn’t seem that Yang’s boss, Lenovo founder Liu Chuanzhi, cares too much what I think, as he has repeatedly stuck with this right-hand man throughout the company’s decline. Read Full Post…

PCs: Lenovo Taps Top Managers for Funds, Goes Retro

By newsdoug on October 9, 2017

Bottom line: Lenovo’s new fund raising and roll-out of a retro commemorative ThinkPad 25th anniversary model show the company is focused on short-term fixes rather than the shock therapy it really needs.

With the October 1 Golden Week holiday now in the rear view mirror, we’ll jump back into the latest tech trends with a look at PC giant Lenovo (HKEx: 992), which was in a couple of headlines over the holiday that underscore its ongoing difficulties. The first of those has the company raising $500 million from a group of its core supporters, who are probably the only ones who have faith that this former superstar can right its sinking ship.

The other has the company rolling out a line of retro computers to celebrate the 25th anniversary of its ThinkPad computers, which arguably launched Lenovo on its trajectory that would ultimately take it to the top of the global PC hill. The only problem is that it’s difficult to stay king of the hill for too long in today’s cut-throat high-tech world, and also there’s the fact that PCs aren’t exactly the cutting-edge product they used to be. Read Full Post…

PCs: All Signals Point Down for Wearying Lenovo

By newsdoug on February 4, 2016

Bottom line: Lenovo chief Yang Yuanqing is likely to resign or get replaced as company head by the end of this year as sales continue to stumble, possibly by recently named President Gianfranco Lanci from its European operations.

If there’s a single word to summarize the latest quarterly results from struggling PC giant Lenovo (HKEx: 992), it’s “down”. Just about every major metric in its just-released results was down, though the company did manage to boost its net profit for the quarter thanks to recent aggressive cost cutting. But lowering costs isn’t a long-term formula for success, and investors are clearly worried about the prospects for Lenovo’s shriveling core PC business and a sputtering mobile device unit that is supposed to be its new growth driver.

Investors were clearly most spooked by Lenovo’s top line revenue, which shrank 8 percent to $12.9 billion in its latest quarter. That was the first time Lenovo has posted such a revenue decline in more than 6 years, and nicely summarizes the company’s struggles in just about all of its major product areas. Lenovo did achieve one notable milestone as its mobile device unit finally climbed from the loss column to break even. But even that is hardly an accomplishment since cost cutting was most likely the main driver behind that movement. Read Full Post…

PCs: Dell’s China Cloud Dream, Lenovo’s Smartphone Shift

By newsdoug on September 11, 2015

Bottom line: Dell’s massive new China commitment could foreshadow a major new tie-up that could see it sell a big stake of itself to a local partner, while Lenovo could be eyeing a major shift to OEM production for its floundering smartphone unit.

Dell bets big on China

Two of the world’s top PC makers are in the China headlines today, with homegrown leader Lenovo (HKEx: 992) and US giant Dell both making major strategic moves. But in a sign of the times, neither item is related to either companies’ core PC business, showing just how quickly personal computers are losing their relevance in the fast-changing gadget world.

Dell’s announcement contains the biggest headline figure, with the company announcing a new commitment to spend a whopping $125 billion in China over the next 5 years. But the Lenovo news is equally intriguing if it’s true, and hints the company could be preparing a major shift for its floundering move into smartphones. That shift would see Lenovo’s smartphone unit build up its business of taking manufacturing orders from third-party brands, a model known contract manufacturing or OEM production. Read Full Post…

CELLPHONES – Smartphones Drag Down Lenovo

By newsdoug on November 7, 2014

Bottom line: Lenovo’s latest results show its smartphone business continues to gain market share at the expense of profits, and it would be better advised to focus on building a strong brand to increase customer loyalty.

Lenovo smartphones post health sales gains

The latest results for leading PC maker Lenovo (HKEx: 992) don’t look too rosy, even as the company’s smartphone business continued to outperform the global market. There are quite a few pieces to this puzzle, which means the longer-term outlook for Lenovo’s smartphone business is still unclear as the overheated market undergoes a much-needed shakeout. The outcome of this story will be crucial to Lenovo’s future, since the global market for its core PC business is stagnating and even starting to contract as consumers gravitate to a newer generation of more mobile, specialized devices. Read Full Post…

Google’s Lenovo Buy Just Temporary

By newsdoug on February 10, 2014

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…

Lenovo-Sony Tie-Up Reports: Too Many Good Deals

By newsdoug on February 7, 2014

Lenovo reportedly eyes Sony’s PC unit

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…

Lenovo Eyes IBM Servers, Jumps In Japan

By newsdoug on January 21, 2014

Lenovo still chasing IBM servers

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…

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

By newsdoug on August 26, 2011

Don't do it, Lenovo! Don’t do it! Those are the only words of advice I can offer Lenovo (HKEx: 992) Chairman and founder Liu Chuanzhi, whose latest comments indicate his is weighing a possible bid for the PC assets that global leader Hewlett-Packard (NYSE: HPQ) is putting up for sale. (Chinese article) Liu, who built Lenovo from a local computer builder into the world’s fourth largest PC brand, was understandably reserved in his remarks to reporters on the subject, but his constant use of the phrase “something to consider” indicates to me that his mind is already moving in the direction of making a bid, an easy conclusion to make in light of his fondness for acquisitions that have included his blockbuster purchase of IBM’s (NYSE: IBM) PC business, and its more recent takeover of smaller PC operations in Japan and Germany. (previous post) Liu, if he did make a bid, would clearly be looking to vault his company past Dell (Nasdaq: DELL) and Taiwan’s Acer (Taipei: 2353) to become the world’s top PC player, which this deal would clearly do. But the risks are huge, and it’s not at all clear to me that Lenovo could survive a successful bid, especially as it faces huge new competition from Apple (Nasdaq: AAPL) in its home China market that accounts for half of its sales. (previous post) At the top of my list of concerns is the very real possibility that Lenovo would seriously overpay for the HP unit, as it faced strong rival bids from better-funded companies like Samsung (Seoul: 005930), Acer, and perhaps even Dell. But even more important, Lenovo would have an extremely hard time integrating its own business with HP’s, which is already much bigger and far more complex due to the company’s longer history and vast geographic reach. Lenovo might argue its IBM PC purchase has given it valuable experience in such integrations, which is partly true. But let’s also not forget the IBM integration was especially painful for Lenovo, and there’s every reason to believe that HP would be even more painful. If Liu Chuanzhi is smart, he will do his due diligence on HP’s PC business, and quickly decide it’s not worth bidding.

Bottom line: Recent comments from Lenovo’s chairman indicate he may be considering a bid for HP’s PC business — a move that if successful would prove disastrous.

别收购惠普PC业务！这是我给联想(0992.HK)创始人兼董事长柳传志的唯一建议。柳传志的近期评论暗示他正在权衡是否收购惠普(HPQ.N)旗下的PC业务。柳传志把联想从一个本土电脑商打造为全球第四大PC品牌，对记者的这一问题表示了可以理解的保留态度。但我认为，他多次使用“值得考虑”一词表明，他有意参加这次竞购，何况他向来喜欢并购，联想曾收购IBM(IBM.N)的PC业务，近期又收购日本NEC和德国Medion公司的PC业务。如果柳传志竞购惠普PC业务，明显是希望超过戴尔和台湾宏基(2353.TW: 行情)，成为全球第一大PC制造商，该收购案如果成功确实能实现这一点。但联想收购惠普PC业务风险巨大，而且我尚不清楚，联想是否能竞购成功，尤其是联想在中国市场还面临苹果(AAPL.O: 行情)的巨大挑战。我最担忧的是，竞购惠普PC业务时，联想面对三星(005930.KS)、宏基、甚至戴尔等对手的强劲竞标，可能会出价过高。但更重要的是，联想在整合惠普与其自身业务时可能历经艰辛，因为惠普历史悠久、市场更多，所以业务更庞大，也更复杂。联想可能会辩称，收购IBM PC业务为期提供了宝贵经验，一定程度上确实如此。但请不要忘记，联想整合IBM时非常痛苦，我们有理由相信，整合惠普会更痛苦。如果柳传志聪明的话，他应该对惠普PC业务进行独立的尽职调查，并迅速作出惠普PC业务不值得竞购的决定。

一句话：联想董事长柳传志近期评论表示，他可能考虑竞购惠普PC业务，此举若成功，有可能会带来灾难性後果。

China Takes Global PC Crown – But Does It Matter? 中国PC出货全球居冠但有何意义?

By newsdoug on August 24, 2011

China takes the computing crown The inevitable as finally happened, as China overtook the US in the second quarter of this year to become the world’s biggest PC market both in terms of unit sales and revenue, according to new data from IDC. (English announcement) The only question is: what does it mean and does the PC element really matter, as PCs are showing signs of becoming a sort of high-tech dinosaur, being rapidly replaced by lighter, more adaptable devices like smartphones and tablets computers. But first the data. According to IDC, PC makers shipped 18.5 million computers worth $11.9 billion to China in the second quarter, versus 17.7 million units worth $11.7 billion for the US. For anyone who’s doing the math, you can see that the average PC sold in China cost around $643, versus $661 for the US, meaning the difference in price wasn’t all that big for the two markets. But at the end of the day, the PC is probably a dying breed and will ultimately be replaced by an array of more specialized, portable devices much the way that desktop PCs have become all but obsolete due to the rise of laptops. As that happens, China will undoubtedly become a leader in many new product categories, at least in terms of sales, simply due to the sheer size of its market, much the way that it has in terms of Internet users and cellphone subscribers. But the recent rise of Apple (Nasdaq: AAPL), which overtook Lenovo (HKEx: 992) in terms of overall China sales (previous post), shows that China’s market for computing devices will become much more competitive as the equation changes, with global players fighting much more aggressively for a piece of this huge market. Hewlett-Packard’s (NYSE: HPQ) planned sale of its PC business will also throw an interesting new element into this equation, providing the buyer of that business with a strong launch pad to take an important piece of this fast-growing market.

Bottom line: China’s emergence as the world’s biggest PC market was inevitable due to its size, bringing a new dynamic as both domestic and international players fight for a bigger piece of the pie.

该来的终究来了。据IDC最新数据，中国今年第二季度无论是从出货额上还是出货量上均超过美国，成为全球最大的个人电脑（PC）市场。唯一的问题是：这有何意义？PC真的重要吗？当今，PC正在某种程度上变成高科技恐龙，被更轻、更便捷的设备如智能手机与平板电脑等迅速替代。不过，还是先来说数据。根据IDC的数字，中国第二季度PC出货量达1,850万台，发货额共计119亿美元；相比之下，美国第二季PC发货量1,770 万台，发货额117亿美元。简单计算一下，在中国每台PC的平均售价约为643美元，美国则为661美元，也就是说在两个国家PC售价差别不大。但是归根到底，PC可能是垂死的一个产品系，最终会被一系列更加专业、便于携带的设备取代，正如目前由于笔记本电脑的崛起，台式机已经江河日下一样。按此形势，中国必定在很多类新产品上都是领头羊，至少在销量上会这样，原因仅仅在于中国市场规模实在是太大了，正如现在中国互联网用户与手机用户全球排名第一一样。但是苹果公司(AAPL.O)近期发威，最近在华整体销量超过本土品牌联想(0992.HK)，显示随着市场形势的改变，中国电脑类市场竞争还会更加激烈，国际品牌将会更加努力争取份额。惠普(HPQ.N)计划出售其PC业务，也会为这个变化的形式中加入新的元素，为买家冲击中国市场提供一个很好的启动基础。

一句话：中国市场规模巨大，成为全球最大PC市场是自然而然、不可避免的结果，在国内外企业竞争这块大蛋糕之际，为他们加入新的动力。