Industry

03/18/2014 - Lenovo To Keep Buying Companies Until It Owns Everything, Everyone


By Matt Burns, Tech Crunch

Lenovo isn’t putting away its checkbook yet. The CEO of the Chinese PC giant said on Tuesday that the company will continue to acquire companies for overall growth. This comes as the company is closing two major deals.

Lenovo recently purchased Mototola Mobility from Google for $2.91 billion. The company also picked up IBM’s server business for $2.3 billion, which seems only natural after Lenovo purchased IBM’s personal computer division in 2005 for $1.25 billion.

Lenovo says it doesn’t plan any additional layoffs at Motorola Mobility.

“Motorola’s handset business has already reduced its head count to around 3,500 employees from 30,000 in the last two years before Lenovo’s acquisition. The remaining employees are all talents and most of them are engineers that can help improve Lenovo’s product development in mature markets,” the WSJ reported Lenovo CEO Yang Yuanqing said after the company’s shareholder meeting. “We can continue to grow our business without cutting any employees.”

This strategy of buying and scaling companies has worked in Lenovo’s favor in the past. When IBM offloaded its mature but stagnant ThinkPad brand to Lenovo in 2005, the Chinese maker made the best of it and scaled the business to become the top shipper of PCs in the world. Lenovo overtook HP in late 2013 in overall PC shipments.

In Lenovo’s home market of China, Lenovo will likely leverage Motorola Mobility to take a more dominant position where it’s already a major player.

In a released statement, Lenovo stresses that it feels that it can turn the unprofitable Motorola Mobility around in four to six quarters. Given Lenovo’s stellar history, that seems like a rather conservative estimate as well.

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