Lenovo sees smartphone growth ahead of Motorola buy

Lenovo sees smartphone growth ahead of Motorola buy

13 FEB 2014

Lenovo talked up strong progress in its smartphone business, as it also provided further details on its planned acquisition of Motorola Mobility from Google.

According to the Financial Times, Lenovo has said it will take “between three and five quarters” to turn the loss-making Motorola around. An earlier Reuters report noted that Lenovo had said the transformation would take “a couple of quarters”, although this appears to have been slightly optimistic.

In a statement, Lenovo said that it “believes the acquisition of such an iconic brand, innovative product portfolio and incredibly talented global team will immediately make Lenovo a truly global smartphone player in the fast-growing mobile space”.

Motorola said it will re-introduce the Motorola brand back into China, “where we expect Chinese customers will again embrace Motorola”, and will also offer Motorola products to customers in emerging markets.

While the combination of Lenovo and Motorola is likely to lead to job cuts due to the overlap in many areas of the businesses, there has already been one high-profile departure revealed. Dennis Woodside, CEO of Motorola Mobility, is set to join online storage company Dropbox as its COO.

Lenovo said that it is “already mapping integration to realise real and substantial synergies from day one”. It also expects to “achieve significant material savings from lower material costs, and global scaling”.

Ahead of the Motorola deal, the company said that for the third consecutive quarter, its combined shipments of smartphones and tablets – 17.3 million devices – exceeded the number of PCs it sold (15.3 million).

It said it “continued to be the world’s fourth-largest smartphone supplier” with 4.8 per cent market share, growing its shipments 47 per cent year-on-year to 13.9 million units. This was “driven by excellent performance of its smartphone launches in a number of new markets”.

Lenovo said in a presentation that it sold 2 million smartphone units outside of China for the first time.

The company recently expanded its portfolio with its first LTE smartphone. It said that it is “ready to capture 4G with new products, especially in China”.

Tablet shipments at 3.4 million (a “record high”) represented 300 per cent year-on-year growth, driven by the launch of its Yoga Tablet (described as a “star product”). Its market share increased by three points to reach 4.3 per cent.

Consolidated sales of Lenovo’s Mobile Internet and Digital Home products, which includes smartphones, tablets and smart TVs, increased by 73 per cent year-on-year to reach $1.72 billion. This unit makes up 16 per cent of the company’s total revenue, up from 11 per cent last year and from seven per cent two years ago.

On a group level, the company reported a profit of $265.31 million, up 29.5 per cent, on revenue of $10.79 billion, up 15.3 per cent.

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Steve Costello

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