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This page contains current research on Lenovo. Information include timeline of firm history, in-depth articles about company events and changes, and analyses of Lenovo. Please click on the titles for the full article. We welcome more contributions - submit through Contact US section.

Source: MarketWatch
Time: 13 October 2006
Title: "PC maker Lenovo turns corner on IBM integration
Author: Chris Oliver

Summary:
Lenovo could be on the upswing after a barrage of "integration hurdles" since acquiring IBM's PC division in 2005. However, analysts remain wary of its long-term growth potential.

Problems faced by Lenovo since IBM acquisition:

  • laptop recall from fault Sony batteries
  • dropped from Hong Kong's Hang Seng Index on Sept. 11, 2006
  • Second quarter European sales fall against year-earlier period
  • Hong Kong-listed shares fallen 13% year-to-date versus 12% gain in Hang Seng Index

Criticisms:

  • branding blunder: phase out IBM brand too quickly → contribute to market-share decline in Europe
  • lagging response to U.S. losses
  • labeled worst of 14 major electronic companies in environmental issues by Greenpeace

Signs of recovery:

  • Revenue increase 38% to $3.5 bn from previous year in fiscal first quarter
  • Net profit of $5 million after $19 million restructuring charge
  • Total PC shipments advance 12% for three months to June v. year earlier → exceed industry-wide growth of 9%
  • Near break-even in Europe, Middle East, Africa → margins improve 1.1%

Lenovo in China:

  • 35% share of total PC shipments
  • China revenues rise 32% and shipments up 30%

Lenovo v. Dell:

  • In India and China: reliance on traditional sales channels maybe better than Dell's direct-sales model

Key Comments:
"...slowly Lenovo is beginning to win over fans, who say it has overcome the most difficult integration hurdles and could now be set to reap the benefits of what was initially scorned as an incompatible marriage. Supporters now cite rising sales and improving profit margins as evidence the union is working"

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