Lenovo Completes US$ 2.91 Bln Deal to Buy Motorola Mobility

31 Oct 2014 | Author: | No comments yet »

Done deal… Motorola is now a Lenovo company.

Dubai: It is a perfect time for the Motorola acquisition and a perfect feat for Lenovo, Yang Yuanging chairman and CEO of Lenovo said in a conference call on Thursday, after the world’s largest PC manufacturer announced the completion of its $2.91 billion (Dh10.69 billion) acquisition of Motorola Mobility from Google Inc. “Their [Motorola] financial results are significantly improving, their revenues were up and shipments soaring. Lenovo and Motorola together form the third largest smartphone player worldwide, according to data from research firm IDC pushing rival Xiaomi from the No. 3 position down to No 4. Lenovo said it completed the $2.9 billion purchase on Thursday, adding to a flurry of acquisitions and initiatives aimed at transforming the world’s biggest maker of personal computers into a major player in wireless computing. As of this morning, Motorola and Lenovo are a clear #3 with 25.6 million devices, 8.7% market share and a global footprint.” Background: Xiaomi shipped 17.3 million w 5.3% share, Lenovo shipped 16.9 million, Motorola shipped 8.7 million devices, so combined Lenovo+Moto shipped 25.6 million, w 8.7% share.

Google, which purchased Motorola Mobility for $12.4 billion in 2012, will keep over 2,000 patent assets and a large number of patent cross-license agreements, as well as the Motorola Mobility brand and trademark portfolio while offloading the handset business. IDC worldwide smartphone data showed Samsung leading with 23.8%, followed by Apple with 12%, Xiaomi with 5.3% and Lenovo following closely with 5.2%, and LG at No. 5 with 5.1%.”Lenovo has a very good smartphone business in India through the offline channel. In the third-quarter, for the first time, Chinese smartphone manufacturer Xiaomi joined the top 3, after Samsung Electronics (005930.KS/SSNLF) and Apple (AAPL).

With this acquisition, Motorola brand is not disappearing from the market, said Rick Osterloh, Motorola President and COO. “This is a great acquisition for Motorola. It’s a good combination,”Liu Jun, Lenovo executive vice president and president of Lenovo’s Mobile Business Group said. “Lenovo will continue with the same market plan in India, which is an important target market,”he added. Lenovo chairman Yang Yuanqing said when the purchase was announced in January that it would help transform Lenovo into a global competitor in smartphones.

According to him, Lenovo is a very successful company and there is an opportunity to sell Motorola products through Lenovo channels and Lenovo products through Motorola channels and drive substantial revenue in the combined business. Since its resurrection early this year, Motorola has sold more than two million smartphones, including the Moto G, Moto X and Moto E, at competitive prices. Lenovo which will operate Motorola as a wholly-owned subsidiary, has strong presence in China, Asia-Pacific, Eastern Europe and other emerging markets, while Motorola has strong presence in the US, North America, Latin America and other mature markets. The brand trails the trio of home-bred handset makers — Lava, Karbonn and Micromax — in that order with Samsung leading the country with a 29% share. Rick will continue to be president and chief operating officer of Motorola, while Liu Jun, the head of Lenovo’s mobile business, will become Motorola chairman.

Just before the acquisition, Lenovo was placed fourth in global smartphone rankings after Samsung, Apple and Xiaomi with 5.2 per cent and with 16.9 million devices sold in the third quarter. The Motorola-Lenovo combine intends to sell about 100 million smartphones and tablets globally by the end of March next year, while Lenovo aims to bring Motorola back to profitability within four to six quarters. When asked about BlackBerry acquisition, Yuanging said: “We are definitely focusing on the equation of this deal and if we want to make another deal we need to make money from this acquisition. As MOT’s ASP is around US$200, it complements Lenovo’s ASP of around US$70 to broaden the product portfolio and possibly embark on a dual-brand strategy in selected markets.

MOT will bring Lenovo more IP than its China competitors and give Lenovo a better chance to succeed outside of China, especially in mature markets, in our view.

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