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Lenovo Group: Innovation And Efficiency Propels Global Competition
- Lenovo recently outperformed Hewlett-Packard, and is edging closer to rivals Apple, IBM, and Samsung in the international, innovative mobile market.
- Lenovo posted very strong results recently, showing a 14 percent increase in revenues than the prior year.
- We recommend Lenovo as a buy in 2014.
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Thu, Oct. 30, 9:24 AM
- Lenovo's (OTCPK:LNVGF) $2.91B purchase of Motorola Mobility from Google is on the books.
- The deal strengthens Lenovo's mobile position in the U.S. and various international markets, and also bolsters its R&D resources. Lenovo has said it's keeping the Motorola brand.
- Though struggling in recent years, Motorola's revenue rose 43% Y/Y in Q3 to $1.69B, thanks largely to successful low-end phone launches. A new high-end phone - the Droid Turbo - was launched with Verizon on Tuesday.
Wed, Oct. 15, 12:53 PM
- Android 5.0, first unveiled as Android L at Google I/O (GOOG -2.8%), features major UI changes (new colors, icons, animations, etc.) thanks to its use of Google's Material Design language. It also supports interactive lockscreen notifications, new voice commands, a new battery saver mode, and better content/app syncing between Android devices.
- Under the hood, 5.0 (codenamed Lollipop) sports a new runtime and graphics extension pack to boost performance - developers have often criticized Android's resource efficiency relative to iOS - and over 5K new APIs, many of which have cross-device interactions in mind. The Verge declares 5.0's UI and feature set "lays the foundation for Android to grow as a platform outside of smartphones and tablets."
- The Nexus 6 phablet (codenamed Shamu) has been officially unveiled. As rumored, the device sports a 5.9" 2K display, 13MP camera, and Qualcomm Snapdragon 805 CPU, and will be made by Motorola Mobility (OTCPK:LNVGY). It's priced at a steep $649 unsubsidized ($300 more than the 5" Nexus 5).
- The Nexus 9 tablet, to be made by HTC (OTC:HTCKF), features a high-res 8.9" display and is powered by Nvidia's (NVDA -1.6%) Tegra K1 processor (contains a powerful GPU). Pricing is once more steep: 16GB and 32GB models respectively go for $399 and $479.
- The Nexus Player set-top is made by Asus (OTC:ASUTY), and runs on Google's new Android TV platform, which delivers a more media-centric UI than the sputtering Google TV. Like Amazon's Fire TV, the Nexus Player has an optional gaming controller. No word on pricing yet.
Wed, Oct. 15, 11:54 AM
- Lenovo (OTCPK:LNVGY) is creating a new company meant to build "a leading internet-based smart devices and services business in China." The company will become operational on April 1, 2015, have its own name and brand, and "focus not only on devices, but also on software and application development and close customer engagement."
- Whereas Lenovo's existing smartphone business (#4 in the world, per IDC) is focused on carrier deals and open market sales, the new unit will "exclusively focus on direct-to-consumer sales, marketing and product development using an internet-based business model."
- That sounds a lot like Chinese rival Xiaomi's recipe for success. The Android OEM, which just passed Samsung to become China's largest smartphone vendor, depends heavily on direct marketing, word-of-mouth, and online sales, all of which help keep its costs down. Xiaomi is also well-known for its MIUI custom Android skin, and for borrowing plenty of ideas from Apple.
- Apple, meanwhile, maintains a large share of the high-end Chinese smartphone market, one that's expected to grow following Friday's Chinese iPhone 6 launch. Creating a new brand offering proprietary software/services for its hardware might allow Lenovo to stand out better relative to Android rivals offering tough price competition. Samsung's efforts to differentiate its Android hardware could serve as a cautionary tale.
Fri, Oct. 10, 7:08 PM
- Built with the help of actor Ashton Kutcher (his official title at the company is "product engineer") Lenovo's (OTCPK:LNVGY) Tablet 2 Pro sports a pico projector said to deliver "an instant 50-inch theater experience," and run for up to 3 hours on a charge.
- The 13.3" Android tablet also contains an Intel Atom CPU, 2K (2560x1440) display, stereo speakers, and a subwoofer, and (per Lenovo) can run for up to 15 hours in non-projector mode. Lenovo has aggressively priced the 32GB model at $499 (on par with a 16GB 9.7" iPad Air).
- Lenovo has also launched: 1) The Yoga 3 Pro, a 13" Windows convertible that's 17% thinner and 15% lighter than its predecessor, which The Verge calls "perhaps the best convertible notebook you can buy." The device uses an Intel Core M CPU, has a 3200x1800 display, and starts at a steep $1,350. 2) The Yoga Tablet 2, 8" and 10" Android and Windows tablets costing $249-$399. 3) The ThinkPad Yoga 14, a $1,200 14" convertible aimed at business users.
- MicroVision (NASDAQ:MVIS) is likely happy to see a pico projector get designed into a high-profile tablet.
Wed, Oct. 8, 5:09 PM
- IDC estimates global PC shipments were down 1.7% Y/Y in Q3 to 78.5M, better than an expected 4.1%. The decline is even with Q2's rate, and better than Q1's 4.4% and Q4 2013's 5.6%. Gartner estimates shipments fell only 0.5%.
- Developed markets continue faring better than emerging markets still getting hit by tablet cannibalization. IDC thinks U.S. shipments rose 4.3%, a bit slower than Q2's 6.9% growth. EMEA grew, while Asia-Pac (exc. Japan) declined. Japanese growth remained "deeply negative."
- The corporate migration from Windows XP to Windows 7 (following MSFT's ending of XP support) is still providing a lift, as is a soft tablet market. However, IDC cautions demand for "large commercial refreshes" remains low.
- Notably, Apple (NASDAQ:AAPL) finally managed to crack IDC's list of the top-5 global vendors: With the help of a strong U.S. market and Mac price cuts, Apple's unit share rose an estimated 60 bps to 6.3%. Revenue share is likely above 10%, given Apple's calendar Q2 Mac ASP was $1,255. U.S. unit share was at 13%.
- The four companies ahead of Apple all grew their shares as well, gaining ground against vendors with less scale: Lenovo (OTCPK:LNVGY) was at 20% (+230 bps), H-P (NYSE:HPQ) at 18.8% (+130 bps), Dell at 13.3% (+140 bps), and Acer (OTC:ACEIY) at 8.4% (+100 bps).
- Intel's (NASDAQ:INTC) Oct. 14 Q3 report should provide additional color on PC demand going into the holiday season.
- Related tickers: AMD, NVDA, MU, STX, WDC, HTCH
Mon, Sep. 29, 2:00 AM
- Lenovo (OTCPK:LNVGY) will complete its $2.1B acquisition of IBM's (NYSE:IBM) x86 server unit on Oct. 1, giving China's biggest personal computer maker a major asset to expand its business client offerings.
- The closing purchase price is lower than the $2.3B valuation announced in January because of a change in the valuation of inventory and deferred revenue liability, says Lenovo.
Thu, Sep. 25, 11:40 AM
- Ahead of Lenovo's (OTCPK:LNVGY) purchase of Motorola Mobility, 9to5 Google reports Motorola's expected Nexus phablet (codenamed Shamu, with good reason) will have a 5.92" display sporting a 2K (2560x1440) resolution.
- It's also expected to be powered by Qualcomm's high-end Snapdragon 805 processor (quad-core, 2.6GHz.), sport a 13MP rear camera and hefty 3,200 mAh battery, and run on Android L. The report comes as Samsung launches the Galaxy Note 4 (also has a 2K display), and Apple rolls out the 5.5" iPhone 6 Plus (has a 1080p display).
- The phablet could bolster Motorola's recent sales momentum - The Information reported in July (citing internal projections) Motorola, aided by successful low-end phone launches, could see its sales double in 2014 following multiple years of huge declines, and might become profitable by mid-2015.
- Lenovo has said it plans to keep Motorola's brand in the U.S. and some other markets, and to leverage the one-time phone giant's R&D ops.
Fri, Aug. 15, 4:20 PM
- The U.S. Committee on Foreign Investment (CFIUS) has signed off on the $2.3B sale of IBM's x86 server unit to Lenovo (OTCPK:LNVGY).
- The deal had been closely scrutinized due to the division's sales to U.S. government clients, sales which have included a decent number of supercomputer deals. IBM has tried to soothe concerns in part by promising it would continue handling maintenance work on Lenovo's behalf "for an extended period."
- Chinese regulators cleared the deal in July. Ahead of the sale, IBM's x86 server revenue fell 3% Y/Y in Q2, a much smaller decline than Q1's 18%.
Mon, Jul. 28, 6:11 PM
- Long-struggling Motorola Mobility could see its phone sales double in 2014, according to internal projections uncovered by The Information. The projections also suggest Motorola, which lost $1.2B last year amid ongoing Android share losses, could turn profitable by mid-2015.
- The projections could suggest Motorola's attempts to move downmarket by launching emerging markets-focused phones such as the Moto E and Moto G have paid off. Its attempts to challenge Samsung and Apple on the high-end with the Moto X fell flat.
- Lenovo (OTCPK:LNVGY), set to pay $2.91B to buy Motorola (while keeping Motorola's brand in the U.S. and certain other markets), must be pleased with the forecasts. As it is, Lenovo aims to ship 80M smartphones this year, up sharply from the 45.5M IDC estimates the company shipped last year.
- The Information also backs up a recent report stating Google and Motorola are working on a 5.9" Nexus phablet appropriately codenamed Shamu. Notably, Google didn't work with Motorola on Nexus hardware prior to the Lenovo deal, as its Android unit tried to placate nervous OEM partners by keeping the Motorola unit at arm's length.
Wed, Jul. 9, 5:29 PM
- Global PC shipments fell only 1.7% Y/Y in Q2 to 74.4M, says IDC. That's much better than the firm's forecast for a 7.1% drop, and smaller than the 4.4% and 5.6% declines respectively seen in Q1 and Q4. Gartner is even more positive, estimating shipments rose 0.1%, thus ending a long string of declines.
- Unsurprisingly (especially given INTC's Q2 guidance hike), IDC thinks business PC upgrades stemming from Microsoft's (MSFT) ending of Win. XP support helped out. But it also says consumer demand was better than expected, with sales of low-end PCs (inc. Chromebooks) improving amid slowing tablet growth.
- Sales in the U.S. and EMEA (two high-ASP regions) rose, while Asia-Pac (exc. Japan) still fell by nearly double digits. IDC now thinks full-year industry growth "could get closer to flat, rather than the May projection of -6%."
- IDC's Q1 share data points to industry leaders gaining at the expense of smaller players: Lenovo (LNVGY) 19.6% share, +270 bps Y/Y. H-P (HPQ) 18.3%, +190 bps. Dell 14%, +180 bps. Acer (ACEIY) 8.2%, -10 bps. Asus (ASUTY) 6.2%, +30 bps. Everyone else 33.6%, -690 bps.
- HPQ +0.6% AH. Other names with strong PC exposure: AMD, NVDA, MU, STX, WDC, HTCH.
Fri, Jul. 4, 4:42 AM
- Lenovo's (LNVGF) $2.3B deal for IBM’s (IBM) low-end server business has been approved by the the Chinese Ministry of Commerce's anti-monopoly bureau.
- The acquisition is still awaiting approval in the U.S., as the Committee on Foreign Investment in the United States investigates possible American national-security risks under the proposed deal, including concerns of the Pentagon's use of IBM servers.
Wed, Jul. 2, 1:56 AM
- Lenovo (LNVGF) is still expecting to close the $2.3B deal on IBM’s (IBM) low-end server business this year, although the acquisition is still being investigated by the U.S. for national-security risks.
- One of the main concerns is that IBM's x86 servers are used in U.S. communication networks and in data centers that support the Pentagon's computer networks.
- The company is also attempting to obtain regulatory approval to buy Google's Motorola Mobility, in another multi-billion-dollar acquisition valued at $2.9B.
Mon, Jun. 30, 5:26 PM
- Lenovo (LNVGY) plans to launch more than 60 smartphones in 2014 as part of an effort to grow its shipments to 80M, says Chinese mobile chief Zhang Hui.
- IDC estimates Lenovo sold 45.5M smartphones in 2013, +92% Y/Y and good for a 4.5% share. The 2014 target implies 76% shipment growth.
- Lenovo, set to acquire Motorola Mobility and its 2K R&D engineers, is looking to sell 60M smartphones in China, and 20M elsewhere. Half of its new models will support 4G.
Wed, Jun. 25, 2:46 PM
- Northland Securities has reported Lenovo (LNVGY) might use Himax's (HIMX +3.3%) LCoS microdisplays in upcoming wearables products.
- The report comes shortly after a Lenovo patent was detected that suggests the PC/smartphone giant is working on a Google Glass-like product.
- Also: In an article embargoed until 3:53PM ET, SA Pro author Jaret Wilson argues Himax's current valuation is covered just by its LCD driver ops, and that its non-driver business (LCoS, image sensors, other ICs) should turn profitable in 2015. Wilson sees both LCoS and Himax's array camera efforts as major potential growth opportunities.
- Shares fell yesterday after Chardan Capital argued Q2 estimates are at risk due to soft Chinese 3G subscriber adds.
Thu, Jun. 5, 2:15 AM
- Lenovo (LNVGF) and IBM (IBM) are looking to extend their deal deadline, as the Committee on Foreign Investment in the United States (CFIUS) continues the review of Lenovo's planned purchase of IBM’s low-end server unit for $2.3B.
- The CFIUS assesses acquisitions for their national-security implications, and the deal between China-based Lenovo and IBM comes at a time of tensions between the U.S. and China over spying and hacking claims.
- IBM CEO Ginni Rometty has stressed the importance of the deal, and how it could stage a comeback for IBM, as users increasingly change to cloud-computing, reducing the need for servers and mainframes.
- If approved, Lenovo has stated that the companies can seal the deal by the end of the year.
Wed, May. 21, 2:59 AM
- Lenovo's (LNVGF) FY net profit leapt 29% to $817M and met forecasts, while revenue climbed 14% to $38.71B.
- Personal computer shipments grew 5% to 55M units despite the broader market contracting.
- Lenovo's smartphone shipments surged 72% to over 50M units, "driven by the strong growth in China and emerging markets."
- Revenue at Lenovo's mobile Internet and digital-home business - which develops the company's smartphones - soared 86.1% to $5.7B.
- However, Lenovo's Chinese sales rose just 1.3% to $14.7B and accounted for 38% of the company's overall revenues. Operating profit was $788M out of a total of $1.05B. Lenovo's operating margin in the country increased 0.9 of a percentage point to 5.4%.
- EMEA sales +27.1%, Americas +31.1%.
- Q4 net profit grew 25% to $158.3M but missed consensus of $163.6M. Sales increased to $9.4B from $7.83B and topped forecasts of $9B.
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