Lenovo Announces Acquisition of Fujitsu

Chloe Brett November 02, 2017
Lenovo Announces Acquisition of Fujitsu

Lenovo Group Ltd. has revealed plans to take over Fujitsu Ltd.’s personal computer business after posting its strongest revenue growth in two years following signs the PC market is stabilizing.

The firm’s group said it had reached an agreement to buy a 51 percent stake in Fujitsu’s personal computer unit for up to $269 million.

“PC is still core of Lenovo. It is still a very decent market ... commercial customers will still use PC,” Lenovo Chairman and CEO Yang Yuanqing said.

Lenovo and Fujitsu had first announced in October 2016 that they were exploring cooperations in their PC business.

Having lost the world’s largest PC maker crown to HP Inc this year, Lenovo has been looking for ways strengthen its core business. Weakness in this segment contributed to a profit decline over July-September, after pushing it into the red for the first time since 2015 in the previous quarter.

Revenue Beats Estimates, Drops

China’s largest PC maker reported a 5 percent jump in revenue to $11.8 billion in the quarter ended September, beating projections for $11.3 billion and marking the biggest rise since the same period of 2015. Net income fell 11 percent to $139 million, which was bolstered by accounting gains. Lenovo rose as much as 5 percent in the afternoon, erasing year-to-date losses.

Lenovo’s global PC unit shipments rebounded 17 percent from the previous quarter, though its PC market share in the six months dropped 0.2 percentage point to 21 percent, Lenovo said, without revealing shipment numbers.

Lenovo is struggling to find growth in its key divisions of personal computers, smartphones and servers. The market shrinkage of the past few years is easing and Chief Executive Yang Yuanqing is taking costs out of a mobile business that’s made little progress since buying Motorola for $2.9 billion.

The company continues to face rising costs for components such as memory chips. Chief Operating Officer Gianfranco Lanci previously said he expects costs for essential components such as memory chips to keep rising throughout the rest of the year, albeit at a slower pace.

“Our mobile business turnaround is still in progress,” Yang said in a statement.

CEO Yang said it was still Lenovo’s target to turn around its struggling mobile business by the end of the financial year in March. The segment reported a narrower operating loss before taxation of $261 million for the second quarter.

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Chloe Brett


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