- Lenovo posted solid beats at the revenue and operating profit lines, as the global leader continues to gain share in PCs and is becoming a bigger factor in smartphones.
- Regulators have given the IBM server deal a little more scrutiny, but both the IBM server and Google Motorola businesses appear to be stabilizing ahead of Lenovo's takeover.
- Lenovo isn't a compelling bargain at a fair value of $30, but a history of both outperforming expectations and share price pullbacks merit a spot on watch lists.
Lenovo Dismisses U.S. Security Concerns On IBM Buy
- News has emerged that the latest deal between IBM and Lenovo is in limbo following the U.S. government's security concerns over IBM's x86 servers.
- The servers are extensively used in the country's communications networks and in data centers that support the Pentagon's computer networks.
- IBM and Lenovo faced a similar situation in 2005 when Lenovo bought IBM's personal computer business.
Lenovo Making The Right Strategic Moves To Build Value
- Lenovo beat expectations for quarterly revenue, gross margin, and operating profit on strong shipment growth in PCs, tablets, and handsets.
- Closing the IBM server and Google Motorola deals is important, but integrating, turning around, and improving the businesses is critical.
- Lenovo looks undervalued below $28, but it will take a few years for margins to recover as Lenovo absorbs the server and Motorola operations.
Is Samsung Vulnerable To An Assault By Lenovo? A Rift With Google Could Expose A Flank
- On the strength of Google's open source Android OS and deep integration into components, Samsung has emerged as the leader worldwide in smart connected devices.
- But there is some evidence Samsung is not happy with Google or Android and seeks alternatives.
- A Samsung-Google rift might open the door for Lenovo to accelerate its already rapid growth in mobile.
After 25% Pullback, Lenovo Looks Extremely Interesting
- After peaking in January, Lenovo's shares have pulled back nearly 25%.
- While indigestion concerns loom after the acquisition of Motorola Mobility and IBM's X86 server group, the growth opportunity is enormous.
- Shares trading at just an $11 billion market capitalization grossly undervalues the company's long-term earnings power.
Can't Ignore Lenovo's Interest In Research In Motion
Supercharge Your Portfolio With This Hot Tech StockCris Frangold • Sep. 25, 2012
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, Aug. 4, 2:06 PM
- With a 14% unit share on the back of 15M shipments (+240% Y/Y), Xiaomi passed Samsung (OTC:SSNLF) in Q2 to become China's top smartphone OEM, per research firm Canalys.
- Samsung, Lenovo (OTCPK:LNVGY), and Yulong (Coolpad) are each estimated to have ~12% of the market. In Q1, Samsung had 18.3% to Lenovo's 11.3% and Xiaomi's 10.7%.
- Xiaomi has gained ground by offering Android phones with high-end specs at mid-range prices. Successful viral marketing campaigns and a popular custom Android UI (MIUI) also haven't hurt.
- The company just launched a new flagship (the MI4) that starts at $320 unsubsidized, and features a 13MP f/1.8 camera and 5" 1080p display. It's counting on former Google exec Hugo Barra to spearhead an international push; Canalys estimates 97% of Xiaomi's Q2 shipments went into mainland China.
- Xiaomi's "borrowing" of ideas from Apple and other rivals has produced controversy. Not only does Xiaomi's hardware take many design cues from the iPhone, founder Lei Jun has cultivated a Steve Jobs-like image, and ended his MI4 launch presentation with a slide prefaced by Apple's "One more thing..." catchphrase.
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.
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.
Fri, May. 16, 7:39 PM
- Apple (AAPL) and Motorola Mobility (GOOG) have agreed to settle all outstanding litigation between the companies in a deal that (notably) doesn't feature a patent cross-license. Apple and Google have also "agreed to work together in some areas of patent reform."
- The settlement comes ahead of the $2.91B sale of Motorola Mobility by Google to Lenovo (LNVGY). Google has said it'll retail most of Motorola's sizable patent portfolio.
- Apple settled its legal battle with HTC in 2012. That agreement included a cross-licensing deal with undisclosed terms.
- Is Samsung (SSNLF) next? Apple's legal victories against Samsung haven't made a large dent in Samsung's balance sheet, nor done much to affect Samsung's Android phone sales. Apple and Samsung execs held mediated talks in February, and also reportedly discussed a settlement last year.
Tue, May. 13, 9:42 AM
- The BlackBerry Z3 (BBRY +0.5%), first announced in February, goes for just $200 unsubsidized and is the first phone to be made via the company's Foxconn partnership.
- As suggested by its codename (Jakarta), the Z3 is initially aimed at Indonesia, a market where BlackBerry still has a sizable base. It sports a 5" 960x540 display, a dual-core, 1.2GHz., CPU, a 3G modem (a 4G version will launch later), and a 5MP rear camera.
- Competition will be provided by low-end Android phones from a slew of OEMs (Samsung, Huawei, ZTE, etc.) and white-box vendors.
- The Z3 launch comes as Motorola Mobility, soon to be owned by Lenovo (LNVGY), launches the Moto E, a $129 Android phone featuring a 4.3" 960x540 display, 3G modem, and 5MP camera.
Tue, May. 6, 3:52 PM
- Digitimes reports Samsung (SSNLF) "putting in weaker-than-expected handset component orders to the supply chain" amid toughening competition, particularly in China. The site adds Samsung, which last month launched its latest flagship (the Galaxy S5), is mostly expected to cut orders for cheaper smartphones.
- The report comes a few days after InvenSense (INVN -2.8%) offered a soft June quarter outlook, while estimating Samsung will return to accounting for a mid-30s % of revenue after making up 47% of March quarter sales.
- Strategy Analytics estimates Samsung saw its smartphone share fall 120 bps Y/Y to 31.2% in Q1 (89M shipments out of 285M), following many quarters of steady share gains. Strategy also estimates Lenovo (LNVGY) grew its share to 4.7% from 3.9%, and that Huawei's share was steady at 3.9%.
- Other Chinese OEMs, including Xiaomi, ZTE, and Coolpad, have also been seeing healthy shipment growth amid an industry mix shift towards cheaper phones aimed at emerging markets. Xiaomi (also a major InvenSense client) is looking to roughly double its shipments in 2014 to 40M.
- Other suppliers with heavy Samsung exposure: OLED, MXIM, SYNA, ANAD.
Fri, May. 2, 12:43 PM
- Citing strong phablet sales and extended upgrade cycles (something CIRP has already observed), IDC estimates global tablet shipments only rose 3.9% Y/Y in Q1 to 50.4M units. That's a marked slowdown from Q4's 28.2% growth, and also below IDC's full-year growth forecast of 19.4%.
- Worth noting: Q1 comps were especially tough, given IDC estimated year-ago shipments were up 142% Y/Y. Easier comps for later quarters could help growth rebound a bit.
- Apple (AAPL +0.3%), which last week reported its Q1 iPad units fell 16% Y/Y to 16.4M (Tim Cook partly blamed inventory changes), saw its share drop to 32.5% from 33.2% in Q4 and 40.2% a year ago. With the iPad's ASP at a steep $465, Apple's revenue share might still be above 50%.
- Android (GOOG) tablets now make up ~2/3 of shipments - that's a positive for Google's traffic acquisition costs, given the huge Mobile Safari search ad payments it makes to Apple.
- Samsung (SSNLF) grew its share to 22.3% from 18.8% in Q4 and 17.5% a year ago. Asus (ASUUY) had 5% of the market vs. 5.4% a year ago, and Lenovo (LNVGY) grew its share to 4.1% from a mere 1.3%.
- While tablet growth slows, IDC has estimated the ongoing decline in PC shipments narrowed to 4.4% in Q1. Garner estimated a mere 1.7% drop.
Wed, Apr. 9, 4:52 PM
- IDC estimates global PC shipments fell 4.4% Y/Y (less than a 5.3% forecast) in Q1 to 73.4M, after having declined 5.6% in Q4 and 7.6% in Q3. Gartner thinks shipments only fell 1.7%, and totaled 76.6M.
- IDC chalks up the narrower decline to healthy commercial demand, as buyers purchased Windows 7 systems ahead of Microsoft's (MSFT) termination of Windows XP support. The firm also thinks slowing tablet growth helped out.
- IDC thinks Japanese shipments rose 7%, and U.S. shipments only fell 0.6% thanks to 3.5% desktop growth. Emerging Asia-Pac and Latin American markets, where tablet cannibalization is at an earlier stage, remained weak..
- A mix shift towards developed markets benefits both Microsoft (higher ASPs, less piracy) and Intel (INTC - higher ASPs).
- IDC estimates market leader Lenovo (LNVGY) had a 17.7% share, +220 bps Y/Y. #2 H-P's (HPQ) share rose 150 bps to 17.1%, and #3 Dell's 170 bps to 13.4%. #4 Acer's (ASIYF) share fell 130 bps to 6.8%, and #5 Asus' 20 bps to 5.9%.
- The Q1 numbers suggest IDC's prior full-year forecast for a 6% shipment drop might prove too pessimistic.
- Other companies with strong PC exposure: AMD, NVDA, MU, STX, WDC, HTCH
Thu, Mar. 20, 5:42 PM
- Lenovo (LNVGY) is buying 21 patent families from Unwired Planet (UPIP), including ones related 3G and 4G networks.
- The deal gives Lenovo, now the world's #5 smartphone vendor (could be #3 after the Motorola Mobility deal closes), more negotiating leverage in cross-licensing deals.
- Unwired Planet says it will still have 2.5K issued and pending patents once the deal closes. The company's market cap was only $142.4M as of today's close.
- CC at 8:30AM ET tomorrow.
Tue, Mar. 18, 1:39 PM
- "We will continue to use acquisitions as a means to grow ... Whenever there is a good opportunity, we will grasp it," says Lenovo (LNVGY, LNVGF) CEO Yang Yuanqing. The remarks come with the ink barely dry on Lenovo's $2.9B deal to acquire Motorola Mobility from Google, and its $2.3B deal to buy IBM's x86 server unit.
- Lenovo will still have $2B in cash after accounting for the cash portions of the Motorola/IBM deals, and is thinking of taking advantage of low interest rates to raise more capital. With the company about to become a major server vendor, Lenovo could go shopping for businesses in complementary enterprise markets (storage, networking hardware, IT services, etc.).
- Yang also insists Lenovo will try to make Motorola profitable by leveraging its economies of scale, rather than further trimming headcount. Motorola has already seen massive job cuts in the Google era.
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