|By Drew Hendricks||
|April 11, 2014 04:10 PM EDT||
If the CEO of the company has anything to say about Lenovo's standing in the PC industry, the company won't stop until massive growth is achieved. In a series of recent buying sweeps, Lenovo has bought Motorola Mobility for a whopping $2.91 billion from Google and also acquired the server business side of IBM for another $2.3 billion; the CEO said in March 2014 that Lenovo will "continue to acquire companies" to secure more growth. It seems like there's no end to the funds Lenovo has available, and closing these two big deals have set up the company for a major overhaul. However, some critics are wondering if Lenovo has what it takes to pull off such a makeover.
It's one thing to acquire companies, and another to make those big purchases profitable within a reasonable timespan. Back in 2005, Lenovo picked up the personal computer division of IBM for $1.25 billion, so it seems like they're setting their big picture goals on that company in particular. One of the big worries which emerged with the Motorola purchase was that of more layoffs, but Lenovo says not to worry. According to the CEO, layoffs are finished and there won't be any more just because of the takeover.
Words from the CEO
To address these fears, Yang Yanging, Lenovo CEO, said at a shareholder meeting, "Motorola's handset business has already reduced its head count to around 3,500 employees from 30,000 in the last two years before Lenovo's acquisition. The remaining employees are all talents and most of them are engineers that can help improve Lenovo's product development in mature markets. We can continue to grow our business without cutting any employees." That certainly helps Motorola workers sleep easier at night, but what else does Lenovo have up their sleeves?
In a world that's going mobile at an incredible speed, Yanging might just be in the right mindset to make some killer moves. By focusing on the server and mobility side, the CEO is right in step with where the tech focus is on a grander scale. Even some of the most traditional industries, such as marketing, are moving into a more digital world by focusing on digital email marketing campaigns and fostering relationships with customers via social media platforms. Of course, these businesses and customers (which is a category almost every single person falls into) need the right technology to make this happen and Lenovo seems happy to provide it.
A smart strategy
Lenovo has a long history of first buying and then scaling companies, such as when the company picked up ThinkPad in 2005. At the time, ThinkPad was a fledgling attempt but Lenovo had what it took to improve it and scale the business into something that became the leading shipper of PCs around the globe. In fact, this strategy worked so well that in 2013, Lenovo surpassed Hewlett Packard (HP) when it came to overall PC shipment and that's one title the company isn't giving up. Slow and steady really can win the tech race, and Lenovo's out to prove it.
The CEO hasn't been very vocal about the next move with these acquisitions, but a guess is that the company will leverage Motorola in an effort to take an even more dominant stance. Already, Lenovo is a big player in the mobility market, but they need a sure thing to secure their spot and Motorola might be it. Lenovo has released an official statement, stating that the company is confident in turning what's now an unprofitable division of Motorola around 180 degrees in under six quarters.
Shooting for the stars
Actually, Lenovo has estimated that it can do this makeover in just four months at best, but the conservative numbers reflect a company that doesn't want to act too quickly or make rash promises. This is a vulnerable time for Lenovo, and each step must be made carefully as billion-dollar acquisitions will likely keep happening. It's quite possible that Lenovo will climb the ranks swiftly and largely under the radar of consumers.
There's no doubt that Lenovo has the leadership and employees to operate a highly profitable business, especially as Chinese companies stake more claims in the tech industry than ever before. While some of the competition can act too swiftly, Lenovo is known for taking a slower and more thoughtful approach. This has worked well for the company in the past, and they're picking up speed at a steady pace. It's too soon to tell if Lenovo really has what it's going to take to monopolize other tech industries, but the company and CEO is definitely off to a grand start.
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