United States
Lenovo Group Limited (PINK:LNVGY) is not against the idea in taking its smartphone business outside of China. Since last year, the company has successfully entered and sold its smartphones in emerging markets, including Indonesia, India, Malaysia, Philippines, Russia and Vietnam. Lenovo’s main objective is to enter the European and U.S market to bolster brand recognition.
Mr. Yuanqing shows an interest in forming strategic alliances and acquisitions in North America to help the company compete in the U.S market. “If an acquisition helps us build capability, we would consider it,” he told the Wall Street Journal in an interview.
Wong Wai Ming, Lenovo Group Limited (PINK:LNVGY)’s CFO, shared the same outlook when interviewed at the World Economic Forum meeting in Davos, Switzerland. “We are looking at all opportunities—Research in Motion (now Research In Motion Ltd (NASDAQ:BBRY)) and many others. We’ll have no hesitation if the right opportunity comes along that could benefit us and shareholders,” Mr. Ming said.
BlackBerry: Licensing Opportunity
According to a Bloomberg report, “Lenovo has spoken to Research In Motion Ltd (NASDAQ:BBRY) and its bankers about various combinations or strategic ventures.” Lenovo purchasing BlackBerry is highly unlikely due to Canadian and U.S regulations. Lenovo needs the approval from regulators because the transaction would exceed $344 million. Lenovo said its cash reserves of $3.1 billion gives the company an opportunity to pursue acquisitions, but BlackBerry may be out of the question.
BlackBerry has looked into licensing its BlackBerry 10 operating system for low-cost entry-level devices. A strategic alliance between Lenovo Group Limited (PINK:LNVGY) and Research In Motion Ltd (NASDAQ:BBRY) would benefit both parties. BlackBerry would provide the sales channels needed for distribution and differentiate Lenovo’s smartphones from the Android community with the BlackBerry 10 platform.
BlackBerry’s presence in China is non-existent. Lenovo utilizing the BlackBerry 10 platform in China would increase BlackBerry awareness. It would form additional revenue streams, increase the number of subscribers and improve Research In Motion Ltd (NASDAQ:BBRY)’s market position in China.
In the PC market, Lenovo Group Limited (PINK:LNVGY) made a number of strategic investments to expand its PC business. It made five purchases in 2011, including the PC units of Tokyo-based NEC Corp. and German-based PC maker Medion AG. Last year, the company acquired Comércio de Componentes Electrônicos (CCE), a Brazilian manufacturer of PCs and consumer electronic products, for $147 million. With these acquisitions, the company has outperformed the declining PC market with impressive sales and margins, while stealing PC market share from Hewlett Packard and Dell.
Lenovo may need to purchase or form business relationships in North America to enter the U.S market. Lenovo Group Limited (PINK:LNVGY) aims to sell 50 million smartphones this fiscal year, but it needs to diversify its smartphones, increase its marketing budget and ramp up its distribution channel if it wants to lure customers away from Samsung and Apple Inc. (NASDAQ:AAPL).
Christopher De Sousa has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article Lenovo Seeks to Bring Chinese Success to U.S Smartphone Markets originally appeared on Fool.com.
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