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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Mon, Jan. 12, 5:58 PM
- IDC estimates global PC shipments fell 2.4% Y/Y in Q4 to 80.8M - a bigger decline than Q3 and Q2's 1.7%, but better than expectations for a 4.8% drop. Gartner is more positive, estimating shipments rose 1% to 83.7M.
- Both firms observe emerging markets, where tablet cannibalization remains a major issue, remain in worse shape than developed markets. IDC also states commercial PC demand (boosted earlier this year by MSFT's ending of Win. XP support) has slowed, and that "market progress has been fueled by low-priced systems, including growth of Chromebooks and [Microsoft's] promotion of Windows 8 + Bing."
- On the bright side, both IDC and Gartner report Asia-Pac returned to positive growth, and that broader consumer demand is gradually improving. The U.S. consumer market is expected to return to positive growth in 2015, aided by slowing tablet demand and the Windows 10 launch.
- IDC believes all top-5 vendors gained share from rivals with less scale. A quarter after cracking the top-5 for the first time with a 6.3% share, Apple's (NASDAQ:AAPL) unit share is believed to have risen to 7.1% (+130 bps Y/Y) on the back of 4.9M shipments (+18.9%). Given higher ASPs, revenue share might be around 15%.
- Market leader Lenovo's (OTCPK:LNVGY) share rose 140 bps to 19.9%; #2 HP's (NYSE:HPQ) rose 300 bps to 19.7%; #3 Dell's rose 140 bps to 13.5%; #4 Acer's (OTC:ASIYF) rose 40 bps to 7.7%. Non-top 5 firms saw their share drop 740 bps to 32.2%, with their shipments declining 20.7%.
- Intel (NASDAQ:INTC), which tends to have good visibility into industry demand, reports on Thursday.
- Related tickers: AMD, NVDA, STX, WDC, HTCH
Wed, Jan. 7, 5:05 AM
- After spending about $5B last year to buy the Motorola smartphone business and IBM's low-end server unit, Lenovo (OTCPK:LNVGY) Chief Executive Yang Yuanqing says that the company's focus for 2015 will be on integration, not more acquisitions.
- Yang doesn't expect Motorola to be profitable for four to six quarters, but he reaffirmed that the new server unit from IBM should turn a profit within the first year.
- Lenovo will also bring Motorola phones back to China this quarter, reintroducing the brand to the world’s largest market after an absence of more than two years.
Mon, Jan. 5, 5:33 PM
- HP (NYSE:HPQ) has launched the Stream Mini and Pavilion Mini, tiny Windows desktops that respectively sell for just $180 and $320, and take aim at desktops running Google's Chrome OS (i.e. Chromeboxes). The Stream Mini has only an Intel Celeron, CPU 2GB of RAM, and a 32GB SSD. The Pavilion Mini has a Pentium CPU, 4GB of RAM, and a 500GB hard drive.
- The tech giant has also launched a slew of high-end displays: The 23.6" Zr virtual reality display, which lets users view 3D images (comes ahead of HP's 3D printer launch); new 27" 4K and 5K-resolution displays; and several displays with curved panels.
- Seagate (NASDAQ:STX) has launched the Seven, a 500GB portable hard drive that's just 7mm thick, as well as a 500GB Wi-Fi-capable hard drive (the Wireless) that lets users offload content from mobile devices to PCs. Also unveiled: The Personal Cloud and Personal Cloud 2-Bay, home media servers that respectively feature 3TB-5TB and 4TB-8TB of capacity. The 2-Bay backs up files to a second drive.
- SanDisk (NASDAQ:SNDK) has launched: 1) The Ultra Dual, a line of of flash drives that connect PCs with Android phones by featuring standard USB connectors on one end, and micro USB connectors on the other. Prices range from $23-$64. 2) The SSD Plus, an entry-level SSD line using 19nm NAND flash, and priced at just $70-$110 (120GB-240GB capacities).
- Ahead of the Apple Watch launch, Garmin (NASDAQ:GRMN) has rolled out three smartwatches. The Vivoactive starts at $250, and pairs a GPS radio with support for mobile notifications. The Fenix 3 starts at $500, and features a number of advanced sports/fitness tracking features. The Epix starts at $550, and combines many of the Fenix 3's features with a moving map.
- Lenovo (OTCPK:LNVGY) has launched: 1) The Vibe Band V10, an $89 fitness tracker with a 1.4" e-ink display. 2) The P90, a 5.5" smartphone with a quad-core Intel Atom CPU and optical image stabilization. 3) The Vibe X2 Pro, a phone that sports an 8-core Qualcomm Snapdragon CPU and (notably) 13MP cameras on both the front and rear.
- Prior CES coverage
Dec. 21, 2014, 1:42 PM
- Xiaomi, whose breakneck growth has led it to quickly emerge as a top-5 smartphone OEM (per Gartner and IDC), is raising over $1B at a $45B+ valuation, the WSJ reports.
- The round is said to be led by a tech investment fund run by ex-Morgan Stanley analyst Richard Ji. A P-E firm affiliated with Alibaba founder Jack Ma is also reportedly participating.
- Gartner and IDC respectively peg Xiaomi's Q3 smartphone share at 5.2% and 5.3% (#4 and #3 globally). The company, known for liberally borrowing ideas from Apple and keeping costs low by heavily relying on online/viral marketing, has said it's aiming to sell 60M phones this year and 100M next year, in part by aggressively expanding in other emerging markets.
- Rivals Lenovo (OTCPK:LNVGY) and Coolpad are both trying to take a page from Xiaomi's playbook. Gartner and IDC respectively have Lenovo's Q3 smartphone share at 5% and 5.2% (#5 and #4). Lenovo, also the world's biggest PC OEM, has a mere $14.6B market cap on the Hong Kong exchange.
- Meanwhile, Indian e-commerce leader Flipkart has raised $700M in a funding round reportedly featuring a $10B+ valuation, just five months after raising $1B at a ~$7B valuation. Investors include Yuri Milner's DST Global (of Facebook/Twitter fame), Tiger Global Management, and Singapore sovereign wealth fund GIC.
- Flipkart's annual GMV run rate topped $1B earlier this year. Competition is provided by Indian e-commerce marketplace Snapdeal (backed by eBay and SoftBank), and also by Amazon, which in July committed to investing $2B in India as it tries to take advantage of liberalizing rules for foreign e-commerce investment.
- Previous: Uber raises $1.2B at $41B+ post-money valuation
- Previous: Barron's argues today's tech bubble is in private markets
Nov. 28, 2014, 8:59 AM
- China's Fenda Technology has announced that it has been selected by Lenovo (OTCPK:LNVGY) as a qualified supplier for the vendor's wearable devices, says DigiTimes according to a Chinese-language Sina.com report.
- The report said that the wearable is possibly a smart wristband and will have a good chance of being showcased Jan. 6-9 at CES 2015 in Las Vegas.
Oct. 30, 2014, 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.
Oct. 15, 2014, 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.
Oct. 15, 2014, 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.
Oct. 10, 2014, 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.
Oct. 8, 2014, 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
Sep. 29, 2014, 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.
Sep. 25, 2014, 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.
Aug. 15, 2014, 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%.
Jul. 28, 2014, 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.
Jul. 9, 2014, 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.
Jul. 4, 2014, 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.
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