Lenovo Group Reiterates Interest in Acquisitions Amid Global Economy Slump

Lenovo Expects Further Consolidation on the PC Market

by Anton Shilov
12/09/2008 | 01:08 PM

The world’s fourth largest supplier of personal computers – Lenovo Group – said that it would expect further consolidation of the PC industry going forward and reiterated its interest in acquiring other PC suppliers despite of ongoing economic downturn.

 

“There is no doubt in this economic situation that you will see consolidation of the PC industry,” said William Amelio president and chief executive officer at a news conference, reports Reuters news-agency.

According to Mr. Amelio, Nintendo’s business was significantly hit by the economic slump as the company suffered from the declines in spending by business and enterprises as well as because emerging markets, particularly China, started to lose their growth pace.

“In the course of the last several quarters, we saw first India slow down as a nation, then PC shipments as well, and Russia. Now China has slowed down significantly, and that has a big impact on our growth rate overall,” said Mr. Amelio.

Chief exec of Lenovo also pointed out that the company was considering reduction of its workforce as well as other ways to cut its expenses. Nevertheless, Mr. Amelio said Lenovo would remain open to possible acquisitions to help drive growth.

This is not the first time when Lenovo openly admits plans to acquire other PC makers. Unfortunately for the company, its only big acquisition in the recent years was IBM’s PC business. The company did not manage to take over Gateway in the U.S. or Packard Bell in Europe and lost its No. 3 spot on the PC market to Acer Group, which commanded 12.6% of computer shipments in Q3 2008, according to Gartner market tracking company, just a percent point behind Dell (13.6%). Furthermore, Lenovo did not, at least openly, fight for Fujitsu-Siemens, when the joint-venture was about to break up in the recent months.

Perhaps, Lenovo is waiting for smaller suppliers of personal computers to suffer hard from economy crisis and then make bids, but since the company itself recently post 78% decline in quarterly profits amid year-over-year shipments increase of 8.1% and market share decline by 0.5%, it remains to be seen whether Lenovo itself will be ready to acquire.


Data includes desk-based PCs, mobile PCs and X86 servers. Acer data includes Gateway’s consumer shipments and Packard Bell shipments. Source: Gartner.