2 big deals take Lenovo just a week to wrap up - Omaha.com
Published Sunday, February 2, 2014 at 1:00 am / Updated at 10:55 am
2 big deals take Lenovo just a week to wrap up

The chief financial officer of Chinese technology giant Lenovo was to spend some time last month rubbing elbows with Hollywood celebrities, corporate chieftains and government leaders in Davos, Switzerland.

Instead, the executive, Wong Wai Ming, 54, was shuttling between law firm offices in frigid Manhattan, putting together two of the most transformative deals in Lenovo’s 30-year history.

In just seven days, Lenovo announced a $2.3 billion deal to buy IBM’s low-end server business and a $2.9 billion pact to acquire Motorola Mobility from Google. A delicate balancing act was required: Neither the IBM team nor the Google contingent could know what was happening.

Each acquisition alone would have been enough to occupy the attention and resources of most other technology giants. But Lenovo is a company in a hurry.

Lenovo ascended to the top tier of technology companies two years ago, surpassing Hewlett-Packard to become the world’s largest maker of personal computers. But with the PC market in decline, Lenovo had already been making drastic moves to ensure its viability.

In early 2012, Lenovo’s chief executive, Yang Yuanqing, began laying out a plan to branch out into smartphones and other devices in what the company called its “PC-plus” strategy.

With the IBM server deal, Lenovo is positioned to take on Dell and HP. Even though many companies are transitioning to higher end servers for complex tasks, the x86 servers Lenovo agreed to buy from IBM will remain in demand for years to come, generating cash flow.

And with the Motorola acquisition, Lenovo will vault into a clear No. 3 position in smartphones, behind Samsung and Apple. Lenovo’s own smartphones are already popular in China, but buying Motorola gives the company a global brand.

The voracious acquisition strategy raises questions about whether Lenovo is trying to do too much, too quickly. In the coming months, Lenovo will have to integrate the money-losing Motorola business, as well as its new servers business.

“The biggest risk is whether the executive management has the wherewithal to do a good job in the integration,” said Andrew Costello, a principal at IBB Consulting. “If they don’t, they’ll lose good people as they work to pull it all together.”

The Motorola deal has obvious risks. On Thursday, not 24 hours after the Motorola deal was announced, Google reported that Motorola had lost $384 million in the fourth quarter.

But Lenovo executives emphasize the value of the Motorola brand. And analysts agree that the deal includes other assets that could give Lenovo a better chance of challenging the top two smartphone makers.

Lenovo executives said they would retain both brand names.

“We are not restricting Lenovo to China or Motorola to the U.S.,” said Wong, the chief financial officer. “They are two different brands with different sets of propositions for the customers. The key for us is to sell more devices to the market.”

USDA official tours Waverly ranch as disaster assistance program begins
Jon Barker replaces Hayneedle co-founder Doug Nielsen as chief executive
Technology – including Google Glass – gets a try-on at Omaha Infotec conference
GROW Nebraska plans entrepreneurship conference
Google applies for patent for camera in contact lens
Caterer's move to downtown Omaha warehouse means new jobs, event center
Crew working to disassemble International Nutrition plant
Six nonprofits benefit from Walmart grants
New Hastings business helps your personal history live on
Alibaba stake fuels Yahoo stock’s rise
Business digest: Big banks might need to hold more capital, Yellen says
18-year-old's fashion-design company wins Maverick Business Plan Competition
In brief: Zebra to spend more than $3 billion on Motorola business
Union Pacific's ‘Big Boy’ locomotive takes the road back to life
Heinz offers buyouts to all Pittsburgh workers
SBA loan activity up in Nebraska
Banker leads Omaha branch's 'Happy' dance video
5 things to know about tax day
Warren Buffett, Charlie Munger 'fiesta ducks' on sale at Berkshire meeting
Nebraska Crossing Outlets stores, layout
West Corp. deal to expand its alert business
Tech talent, tax incentives help lure MindMixer to Kansas City
The Record: Bankruptcies, April 15
More have had personal information stolen
In brief: Retail sales gain is best since 2012
Deadline Deal thumbnail
Shoreline Golf Club
$40 for 2 Players, 18 Holes of Golf with Cart ($85 Value)
Buy Now
< >
Inside Business
To submit an announcement for "Inside Business", click here. For questions call (402) 444-1371 or e-mail announcements@owh.com.
Want to get World-Herald stories sent directly to your home or work computer? Sign up for Omaha.com's News Alerts and you will receive e-mails with the day's top stories.
Can't find what you need? Click here for site map »