Stephen Simpson, CFA • 10 Comments
Stephen Simpson, CFA
Stephen Simpson, CFA
Nov. 12, 2015, 11:39 AM
- Lenovo (OTCPK:LNVGY) rose 5.8% in Hong Kong after reporting FQ2 revenue of $12.2B, up 16% Y/Y (23% exc. forex) thanks to the Motorola Mobility acquisition (closed in Oct. 2014) and beating an $11.8B consensus. Shares were down 29% YTD going into earnings.
- The company officially posted a $714M net loss (slightly below an $803M consensus), but had pre-tax income of $166M after backing out $599M in restructuring costs, a $324M smartphone inventory charge, and $85M in various non-cash charges.
- A weak PC market led PC division sales to drop 5% Y/Y to $8.1B, with division op. income falling 17% to $406M. Enterprise sales rose 5.5x to $1.2B thanks to the acquisition of IBM's x86 server unit, which contributed $900M.
- Mobile sales rose 104% to $2.7B thanks to the Motorola deal. Motorola had revenue of $1.4B, down from $1.69B a year ago as part of Google. The entire mobile division had an op. loss of $217M. Thanks in part to Motorola, 70% of FQ1/FQ2 shipments came from outside of China, up from 19% a year earlier.
- Chinese sales totaled $3.3B (now just 28% of total revenue), Asia-Pac $2B, EMEA $3.2B, and the Americas (significantly boosted by M&A) $3.7B. Chinese mobile sales were pressured by "hyper competition, carrier subsidy cuts and continued shift to the online model." India (revenue +99% Y/Y) was a strong point. "Our first priority is to grow in the rest of the emerging markets," says CEO Yang Yuanqing.
Feb. 18, 2015, 1:35 PM
- Fresh off acquiring IBM's x86 server unit, Lenovo (OTCPK:LNVGY) plans to create an ARM (NASDAQ:ARMH) server prototype for its IBM-developed NeXtScale high-density server line (used in scale-out data centers running Web/cloud, HPC, and analytics workloads). The effort is part of a collaboration with a U.K. HPC R&D lab.
- Lenovo's server will run on Cavium's (NASDAQ:CAVM) ThunderX ARM server CPU line, which supports up to 48 cores per chip and clock speeds of up to 2.5GHz. Lenovo asserts 12 of its ARM servers will support up to 1,152 CPU cores and occupy a modest 6U of rack space.
- The deal gives Cavium a high-profile client as it battles against AppliedMicro, AMD, Qualcomm, and others in the budding ARM server CPU market. Cavium has tried to differentiate itself from rivals in part by creating ThunderX CPUs optimized for storage, networking, and security appliances, as well as by providing high levels of I/O bandwidth. Shares have made new highs.
Oct. 20, 2014, 11:16 AM
- "A source familiar with the matter" tells Benzinga Lenovo (OTCPK:LNVGY) could make an offer to acquire BlackBerry (NASDAQ:BBRY) as soon as this week.
- Before BlackBerry named John Chen CEO and stopped looking for a buyer last November, Lenovo was reported to be weighing a bid for all or parts of the company. The Canadian government responded by saying it would scrutinize the national security impact of any offer. Since then, Lenovo has agreed to pay $2.91B to acquire Motorola Mobility from Google.
- Short-covering could be driving today's gains: 19% of BlackBerry's float was shorted as of Sep. 30.
Jun. 25, 2014, 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.
Mar. 20, 2014, 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.
Feb. 4, 2014, 12:37 PM
- The Nikkei reports Sony (SNE +5.1%) is in talks to sell its Vaio PC unit, and is looking to receive ¥40B-¥50B ($394M-$492M).
- The report follows one over the weekend stating Lenovo (LNVGY), which last month struck deals to buy Motorola Mobility and IBM's x86 server unit, is in talks to acquire Sony's PC ops. Sony called the report inaccurate, but admitted it's exploring options for the business.
- Sony shares have shot higher on the Nikkei's report. Investors like the idea of unloading a loss-generating unit that has struggled to deal with declining PC sales and tough competition from Lenovo, H-P, and others. The company's FQ3 report is due on Thursday morning.
- Thanks to both the Sony report and a massive equity selloff, Lenovo shares are down 16% in Hong Kong over the last two days.
Jan. 14, 2014, 5:42 PM
- PC industry names outperformed amid a broader tech rally, aided by a JPMorgan Intel (INTC +4%) note that argued PC demand is stabilizing, and tablet cannibalization diminishing. A number of chip stocks also rallied strongly (SOXX +2.1%).
- Also: Major hard drive suspension assembly maker Hutchinson has reported above-consensus Dec. quarter sales, while citing strong demand for 2.5" notebook drive assemblies. Seagate and Western Digital both rallied.
- JPMorgan's Christopher Danely, who upgraded Intel to Overweight, has raised his 2014 estimates soundly above consensus ahead of the chip giant's Thursday Q4 report. Danely notes Intel, Microsoft, H-P, and others have said PC demand is improving, and that Taiwan's big-4 notebook contract manufacturers collectively grew their shipments 7% Q/Q in Q4. Q1 shipments are expected to drop in-line with seasonality.
- He also points out tablet shipment growth is decelerating, and forecasts shipments will only rise 25% in 2014 (down from 53% in 2013).
- Danely's optimism contrasts with another bearish Intel note from Bernstein's Stacy Rasgon, who estimates five mobile CPU sales are needed to make up for one PC CPU sale, and doubts Intel's foundry business will move the needle.
- PC industry gainers: MSFT +2.3%. HPQ +2.6%. AMD +4.1%. NVDA +3.1%.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
- Previous: Goldman on Intel's Q4, Gartner/IDC's Q4 PC estimates, Intel's light 2014 guidance
Oct. 17, 2013, 2:48 PM
- Dow Jones reports Lenovo (LNVGY.PK) has signed an NDA to look at BlackBerry's (BBRY +1.6%) books. The report comes two days after one from Bloomberg indicating an NDA has been signed with Cerberus.
- Lenovo has been featured in BlackBerry M&A speculation more than once this year, in part due to comments from Lenovo execs. But the Chinese PC/smartphone vendor's relatively small market cap could be an issue, as might national security concerns (should Lenovo want to acquire BlackBerry's network).
- BlackBerry has rallied a bit on the report.
Aug. 28, 2013, 12:14 PM
- Rumors Lenovo (LNVGY.PK) will make a $17/share bid for BlackBerry (BBRY +5.3%) are fueling a rally in the latter company's shares.
- BlackBerry shares have already soared more than once this year on Lenovo speculation (I, II) that didn't pan out. But that was before the company began formally evaluating "strategic alternatives" widely believed to include a sale.
- The fact Lenovo's market cap only stands at $10B means acquiring BlackBerry in full wouldn't be easy, should the Chinese PC/smartphone giant be interested.
Aug. 14, 2013, 10:35 PM
- Lenovo (LNVGY.PK) — now the world's largest PC maker — posts an FQ1 net profit of $174M (+23% Y/Y), beating consensus estimates by $8M.
- Revenue for the period comes in at $8.78B, up 10% Y/Y.
- Gross margin and operating margin were 13.6% and 2.3% respectively for Q1. (presentation)
- Shares +2.9% in Hong Kong trade.
Apr. 11, 2013, 8:24 AM
In addition to the fall in Microsoft's shares, companies exposed to the PC market drop further after IDC said yesterday that global computer shipments slid 13.9% in Q1. H-P HPQ -5.2%, Lenovo (LNVGY.PK) -5.8% in Hong Kong, Intel (INTC) -2.3%, AMD -2.7%, Nvidia (NVDA) -2.1%, Seagate (STX) -1.85%, Western Digital (WDC) -1.3%. (previous)| Apr. 11, 2013, 8:24 AM | 6 Comments
Mar. 13, 2013, 10:53 AM"There is not and has not been any specific evaluation or activity underway regarding BlackBerry (BBRY -0.9%)," says a Lenovo (LNVGY.PK) spokesman, discussing recent speculative remarks from CEO Yang Yuanqing. BlackBerry shares remain up 9.8% on the week. (Pac Crest) | Mar. 13, 2013, 10:53 AM | 7 Comments
Jan. 29, 2013, 12:30 PM
RIM (RIMM -6.3%) is falling hard again ahead of tomorrow's BB10 event, where the Z10 and X10 are expected to be unveiled. Critical comments from UBS and CLSA could be playing a role - the former declares BB10 price points too high for emerging markets, and thinks iOS and Android have a stranglehold elsewhere. On the flip side, OTR Global thinks a Lenovo partnership could be announced soon; Lenovo recently declared comments about a possible RIM bid to be taken out of context. The WSJ has taken a look at the challenges RIM faces in winning back corporate clients.| Jan. 29, 2013, 12:30 PM | 16 Comments
Jan. 24, 2013, 11:43 AMRIM (RIMM +4.3%) has shot higher after Lenovo (LNVGY.PK) CFO Wong Dai suggests his company is open to buying RIM. "We are looking at all opportunities -- RIM and many others" spoke Dai at Davos, while noting RIM's run-up makes a deal more expensive. The comments come shortly after Thorsten Heins mentioned the possibility of selling RIM's hardware ops, something a Canadian government official didn't sound enthusiastic about. Lenovo's smartphone sales have surged lately. | Jan. 24, 2013, 11:43 AM | 9 Comments