Lenovo Wraps up Two Deals in Just Seven Days
Last week, the chief financial officer of Lenovo, the Chinese technology giant, was expected to rub elbows with corporate chieftains, Hollywood celebrities and government leaders in Davos, Switzerland. Instead, Wong Wai Ming, the executive who is a 54-year-old former investment banker, spent the week shuttling between the law firm offices in Manhattan in order to tie off two of the most transformative deals that have been made in the 30-year history of Lenovo. It took only seven days for the Chinese firm to announce that it has chosen to buy the low-end server business of IBM for $2.3 billion and also made a pact of acquiring Motorola Mobility from Google for $2.9 billion.
This required a delicate balancing act as neither the Google team downtown nor the IBM contingent midtown was supposed to know what was happening. The resources and attention of most technology giants would have been occupied by each acquisition alone, but it seems that Lenovo is in a bit of a hurry. It was two years ago that Lenovo had ascended to the top-tier of technology companies and had become the largest maker of personal computers in the world by surpassing Hewlett-Packard. However, with a steady and ongoing decline in the PC market, Lenovo is ensuring its future viability by making drastic movies. These deals simply seem to be foresight on the Chinese company’s part.
In early 2012, the chief executive of the company had introduced a PC-plus strategy, which was basically a plan to branch out into smartphones and other devices. The company will be in the best position to take on HP and Dell with its IBM server deal. Even though, higher end servers are now being used by numerous companies for complex tasks, the servers that Lenovo is purchasing from IBM will be in demand for several years to come and give the company a steady cash flow. Apart from that, the Chinese giant will be able to vault into the No. 3 position in the smartphone market with the Motorola acquisition, just behind Samsung and Apple.
The smartphones of the company are popular in China, but it will become a global brand with Motorola’s acquisition. The chief executive of the company was quite blunt in his interviews and stated that their intention was to surpass Samsung and Apple in the smartphone market. Nonetheless, on the other end, there have been questions regarding the voracious acquisition strategy of the company as it seems that Lenovo seems to be doing too much a little too quickly.
In the upcoming months, the company will have the responsibility of integrating its new server business and also the money-losing Motorola business. The executive management has to do a good job in the integration or they might end up losing a lot of good people. There are obvious risks associated with the Motorola deal as the recent phones haven’t seemed to be selling well. But, the executives of Lenovo have emphasized on the value of the Motorola brand and the deal also includes other assets that could be beneficial.