Google buys 6% stake in Chinese PC maker Lenovo

February 8, 2014 Leave a comment

7 February 2014 Last updated at 07:06

Google buys 6% stake in Chinese PC maker Lenovo

Google bought a near 6% stake in Lenovo for $750m (£459m), just a day after selling handset-maker Motorola Mobility to the Chinese PC maker.

According to a stock exchange filing, Google acquired 618.3 million Lenovo shares at $1.21 each on 30 January.

Last month, Lenovo spent a combined $5bn on buying Motorola Mobility and IBM’s low-end server business – the two biggest deals in the company’s history.

Lenovo shares were down by nearly 1% in Hong Kong on Friday.

Investors have criticised the Beijing-based company’s recent acquisition spree, which has been aimed at offsetting its shrinking PC business.

Lenovo has lost 24% of its market value since the $2.91bn Motorola Mobility deal was announced on 29 January.

At least five major brokerages have also downgraded their outlook on the firm, which has publicly spoken about its desire to become a global player.

However, analysts are pessimistic about its most recent purchase, saying Lenovo may have overpaid and will face a tough time turning Motorola’s unprofitable handset business around.

Global ambitions

Lenovo, which was founded in 1984 as a PC distributor, has grown largely due to high-profile global acquisitions.

Its 2005 purchase of IBM’s Thinkpad business, for example, helped the company overtake Hewlett-Packard as the world’s top PC maker in 2012.

But as more users shunned traditional PCs for more portable devices, Lenovo has been looking to expand its offering under the so-called PC Plus plan.

As a result, the firm has unveiled a line of lower-end tablets and smartphone that have sold well in China and other emerging markets.

It has also launched global marketing campaigns using Hollywood celebrities such as Ashton Kutcher, aimed at making the brand more globally recognised.

The company now hopes to produce more sophisticated offerings through its Motorola purchase, and crack the lucrative US and European markets.

The Motorola acquisition has already helped it leapfrog competitors in the global smartphone rankings.

From being the fifth largest smartphone seller in the world last year, it is now set to be the third.

Lenovo is scheduled to release its latest earnings on February 13.

 

Filed under TMT Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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