Lenovo (HKSE: 992) (ADR: LNVGY) is dedicated to building exceptionally engineered personal computers. Lenovo's business model is built on innovation, operational efficiency and customer satisfaction as well as a focus on investment in emerging markets. Formed by Lenovo Group's acquisition of the... More
Friday, Mar 77:05 PM
Friday, Mar 77:05 PM| 22 Comments
- Citing "slowing consumer purchases" amid high penetration rates in mature markets, IDC now forecasts tablet shipments will grow 19.4% in 2014 (to 260.9M units), down from a prior estimate of 22% (271M units).
- Tablet growth steadily slowed in 2014: Shipments rose an estimated 142% in Q1, but just 28% in Q4. IDC puts full-year growth at 52%.
- Two silver linings for high-end/enterprise leader Apple (AAPL - 33.8% Q4 share): 1) ASPs are only expected to drop 3.6% in 2014, after falling 14.6% in 2013, as more consumers embrace "higher-end devices." 2) Commercial buyers are expected to account for 14% of shipments, up from 11% in 2013.
- IDC also thinks Windows (MSFT) tablets, struggling to gain a strong consumer foothold, will take over a quarter of the commercial segment thanks to rising convertible adoption.
- The revised forecast still puts tablet sales within striking distance of eclipsing PC sales: IDC expects PC shipments to drop 6% this year to 295.9M. Smartphone shipments are expected to grow 19% to 1.2B.
- Major tablet OEMs (besides Apple): SSNLF, LNVGY, AKCPF
Wednesday, Mar 56:06 PM
Wednesday, Mar 56:06 PM| 26 Comments
- After growing ~60% in 2013 (and fueling global shipment growth of 39%), IDC expects Chinese smartphone shipment growth to slow to ~20% in 2014 and just ~10% in 2015.
- Though only 40% of China's 1B+ mobile users now use a smartphone, IDC's Kiranjeet Kaur notes most users who can comfortably afford a smartphone have already bought one. Plunging low-end Android prices could expand the addressable market in a country whose nominal per capita GDP is around $6K.
- India, which has a sub-10% smartphone penetration rate, still presents a major growth opportunity. But with a nominal per capita GDP of ~$1,500, the country is even more cost-sensitive than China.
- With China slowing down and developed markets living up to their name, IDC expects global smartphone growth to slow to 19% in 2014; that still spells total volumes of 1.2B. Tough competition and the ongoing mix shift towards emerging markets is expected to lead the industry's ASP to fall $27 to $308.
- Smartphone OEMs with strong Chinese exposure: AAPL, SSNLF, LNVGY, ZTCOY
- Chip suppliers: QCOM, BRCM, CRUS, SWKS, RFMD, MRVL
- Chinese carriers: CHL, CHU, CHA
Monday, Feb 244:09 AM
Monday, Feb 244:09 AM| 89 Comments
- Microsoft (MSFT) is expanding the number of manufacturers of Windows phones by enabling the latter to use cheaper components with the software.
- Companies that Microsoft is working with include Lenovo (LNVGF), Hon Hai Precision Industry (HNHAY), LG Electronics (LGEAF), ZTE and India's Xola and Karbonn.
- Microsoft provided details at the Mobile World Congress.
- Meanwhile, Nokia (NOK) is launching three Android phones even though the company's handset unit is being sold to Microsoft and the latter is looking to facilitate cheaper Windows phones. The Nokia X will cost €89 and will integrate Microsoft services such as Bing and Skype. The home screen will use tiles, as in Windows phones. Meanwhile, the Nokia X+ is priced at €99 and the XL, with a bigger screen, at €109.
- See Nokia to launch Android phones in China.
Thursday, Feb 134:02 AM
Thursday, Feb 134:02 AM| Comment!
- Lenovo's (LNVGY) FQ3 net profit climbed 29% to $265.3M, easily beating consensus of $247.2M.
- Revenue increased 15% to $10.79B, the first time sales have topped $10B.
- The company's earnings were lifted by robust sales of PCs and mobile devices in China.
- The firm sold 17.3M smartphones and tablets, and 15.3M PCs.
- Laptop sales +11%, desktops +12%.
- However, Lenovo warned that its acquisitions of Motorola Mobility from Google and of IBM's low-end server unit could hurt profitability in the short term. Still, Lenovo reckons it can turn Motorola around within three-to-five quarters.(PR)
Friday, Feb 73:19 AM
Friday, Feb 73:19 AM| 4 Comments
- Reports that Google (GOOG) has purchased a 5.94% holding in Lenovo Group (LNVGY) for $750M are incorrect, the re/code Web site says.
- Re/code writes that the reports were due to a misreading of a filing by Reuters.
- Google is due to receive $750M worth of Lenovo shares as part of the deal to sell its Motorola handset division to the Chinese company for $2.91B in cash and stock.
Tuesday, Feb 412:37 PM
Tuesday, Feb 412:37 PM| 12 Comments
- 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.
Sunday, Feb 22:21 AM
Sunday, Feb 22:21 AM| Comment!
- Sony (SNE) is considering "various options" for its Vaio PC unit, the company said yesterday, but it described as inaccurate a report that it is in discussions with Lenovo (LNVGF) for a joint venture that would take over the loss-making business' overseas operations.
- The Japanese firm has said in the past that it intends to change its product and manufacturing strategy for Vaio.
- Sony is due to report its latest earnings results this week.
Friday, Jan 317:20 PM
Friday, Jan 317:20 PM| 17 Comments
- After taking in Google's (GOOG) Q4 numbers, FBR estimates handing off Motorola Mobility to Lenovo (LNVGY) could boost the Web giant's op. margin by as much as 500 bps. Whereas Google proper has an op. margin of 34%, Motorola's losses dragged down the company's total op. margin to 29%.
- TechCrunch reports that with Motorola gone, newly-acquired Nest will serve as Google's primary hardware team. Nest, founded by iPod "godfather" Tony Fadell, will reportedly develop gadgets very different from the smart thermostats/smoke alarms it's known for.
- Many observers think the Lenovo sale is at least partly tied to Google's recent deals with Samsung (SSNLF). The reasoning: Samsung's reported willingness to embrace a vision of Android closer to Google's (toning down support for custom apps/UIs, and promoting Google apps/services) is linked to Google's decision to sell its mobile hardware unit.
- It's possible Google also gave Samsung favorable terms in their recent cross-licensing deal. In terms of patent portfolio/breadth, Google held the upper hand.
- In addition to keeping most of Motorola's patents, Google is holding onto the company's Advanced Technology unit, which is responsible for the Project Ara modular phone initiative.
- Lenovo says it will keep the Motorola brand in the U.S., and that it aims to eventually pass Apple and Samsung to be the world's largest smartphone vendor.
- Previous: Google earnings coverage
Wednesday, Jan 295:25 PM
Wednesday, Jan 295:25 PM| 38 Comments
- Just an hour after reports emerged Google (GOOG) is set to sell Motorola's phone ops to Lenovo (LNVGY), the deal has been announced by Larry Page. Lenovo will pay $2.91B for the struggling, loss-generating smartphone maker; Google will retain the "vast majority" of its patents.
- Page explains the deal by stating the smartphone market is "super competitive," and that "it helps to be all-in." He promises the sale doesn't have broader implications for Google's hardware efforts.
- Google paid $12.5B for Motorola Mobility in 2011. After backing out the Lenovo sale, the Arris sale, and $3.5B in cash, Google effectively paid ~$3.7B for Motorola's patents, assuming one doesn't count the losses the phone unit has produced under Google's control.
- The sale expands Lenovo's U.S. presence, and gives it access to Motorola's respected hardware engineering teams as it tries to grab high-end Android share from market leader Samsung (SSNLF). IDC estimates Lenovo had a 4.9% smartphone share in Q4 (up from 4.1% a year ago).
- The deal also removes a point of friction between Google and its Android partners. It shortly follows a report stating Google has pressured Samsung to tone down its Android UI changes and more strongly emphasize Google's apps/services, as it tries to exert greater control over Android's look and feel.
- GOOG +2.2% AH. In addition to the Motorola deal, shares could be getting a lift from Facebook's Q4 beat.
Wednesday, Jan 294:19 PM
Wednesday, Jan 294:19 PM| 6 Comments
- Reuters and China Daily both report Lenovo (LNVGY) is set to buy Motorola Mobility's phone unit from Google (GOOG). The former says the price tag is close to $3B; the latter says it's "at least" $2B. China Daily says the deal will be announced tomorrow morning in Beijing.
- Motorola Mobility has been bleeding share and (in spite of huge job cuts) posting big losses since Google's 2011 acquisition, as products such as the Moto X and Moto G fail to produce a turnaround in the face of stiff high-end competition from Samsung and Apple, and stiff low-end competition from a slew of Asian OEMs (including Lenovo).
- Google has already sold Motorola's set-top/cable infrastructure unit to Arris for $2.35B. The company will presumably hold onto Motorola's sizable mobile patent portfolio.
- Investors are pleased, GOOG +1.2% AH. Q4 results are due tomorrow.
Thursday, Jan 234:10 AM
Thursday, Jan 234:10 AM| 7 Comments
- As flagged, IBM (IBM) has agreed to sell its low-end x86 server business to Lenovo (LNVGY) for $2.3B, of which $2B will be in cash and the rest in stock.
- IBM and Lenovo will also form a partnership that will include a global OEM and reseller agreement for various IBM products, including its entry and mid-range Storwize disk storage systems.
- Around 7,500 IBM employees will be offered jobs at Lenovo.
- "This divestiture allows IBM to focus on system and software innovations...such as cognitive computing, Big Data and cloud," says IBM's Steve Mills.
- The deal comes after IBM's hardware division suffered another wretched quarter in Q4, with x86 sales dropping 16%.
- The question is whether U.S. security concerns will cause a delay to the transaction or cause it to be blocked. (PR)
Wednesday, Jan 226:55 PM
Wednesday, Jan 226:55 PM| Comment!
- The WSJ reports Lenovo (LNVGY), once the buyer of IBM's PC unit, is now close to acquiring its x86 server ops. Sources state a deal could be announced as soon as tomorrow.
- No word on price; "interested parties" not named Lenovo reportedly valued the unit at $2.5B when IBM shopped the business last year, but its recent performance might spell a lower price tag.
- Big Blue reported yesterday its x86 server sales fell 16% Y/Y in Q4; that was actually better than the 26% drop reported for hardware/chip sales overall. The business has been pressured by fierce competition from H-P and Dell, and the use of white-label hardware by Web/cloud giants.
- Selling the x86 unit would continue a long-term trend by IBM of unloading lower-margin hardware businesses in order to focus on software/services. It would also strengthen a balance sheet that has been dinged by huge buybacks and declining free cash flow (-18% Y/Y in 2013).
- Previous: Lenovo reportedly in talks to buy x86 unit
Monday, Jan 209:58 PM
Monday, Jan 209:58 PM| 2 Comments
- Lenovo (LNVGY, LNVGF) is in talks to buy IBM's low-end x86 server business, and a deal could be signed within weeks, Bloomberg reports.
- The two companies were said to be negotiating a deal for the division last year, but no agreement was reached on a price.
- Lenovo said today it’s in preliminary discussions on some kind of possible acquisition, but it did not identify the target or seller.
- Dell also may be among potential buyers, but it's not clear how seriously it is considering an acquisition.
Tuesday, Jan 145:42 PM
Tuesday, Jan 145:42 PM| 14 Comments
- 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
Thursday, Jan 95:58 PM
Thursday, Jan 95:58 PM| 32 Comments
- IDC and Gartner respectively estimate PC shipments fell 5.6% and 6.9% Y/Y in Q4. Those numbers represent improvements from estimated Q3 declines of 7.6% and 8.6%. For the full year, both firms think shipments dropped 10% (to 315M and 316M, respectively).
- Gartner thinks U.S. PC sales (outperformed in Q3) have bottomed, but nonetheless estimates they fell 7.5%, and states "consumer spending during the holidays did not come back to PCs as tablets were one of the hottest holiday items."
- IDC thinks U.S. shipments only fell 1.6%, thanks to healthy enterprise demand. EMEA and much of Asia-Pac remained weak, but Japan delivered positive growth. The U.S. and Japan have higher ASPs and lower piracy rates than many emerging markets.
- Lenovo (LNVGY) added to its market lead in Q4: IDC assigns the company an 18.6% share (+250 bps Y/Y). #2 H-P, which performed well in its October quarter, is given a 16.8% share (-50 bps); both IDC and Gartner think H-P's U.S. sales were weak. #3 Dell, which has been cutting prices to gain share, is given a 12.2% share (+130 bps).
- H-P and Lenovo have each rolled out a slew of new Windows and Android notebooks, tablets, and convertibles at CES. Lenovo's pricing has arguably been more aggressive than H-P's.
- Other PC industry names: MSFT, INTC, AMD, NVDA, MU, STX, WDC.
Thursday, Jan 26:21 PM
Thursday, Jan 26:21 PM| Comment!
- Lenovo (LNVGY, LNVGF) is set to begin selling its flagship Vibe Z smartphone outside of China. The device features a 5.5" 1080p, Qualcomm's high-end Snapdragon 800 CPU, a 13MP camera, and 4G support, and carries an unsubsidized price of $549 (on par with other high-end Android phones).
- Lenovo has also begun selling three 3G-only mid-range Android phones - the A859, the S650, and the S930 - outside of China. The devices appear to be aimed at Asian markets where demand for cheap Android phones has taken off.
- IDC estimates Lenovo shipped 12.3M smartphones and had a 4.7% smartphone unit share in Q3, up from 3.7% a year earlier. The company has made lofty mobile ambitions, and is counting on its low-cost manufacturing expertise and U.S. resources (stemming from its acquisition of IBM's PC unit) to help it stand out.
- At the same time, the company faces stiff Android competition from Samsung (31.4% smartphone share), as well as local rivals such as Huawei (4.8% share), ZTE, and Xiaomi.