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Lenovo logs into acquisitions to stay ahead
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08:36, September 13, 2007

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The global PC market will be controlled by a few key players and Lenovo will continue seeking acquisitions to keep up with the trend, company chairman Yang Yuanqing has said.

"The PC industry has been consolidating," Yang told China Daily, elaborating on the company's strategy to stay ahead of the game.

On August 7, Lenovo, the world's third-largest PC maker after HP and Dell, announced it had exclusive negotiation rights to buy Packard Bell, the fifth-largest PC maker in Europe.

Only 20 days later, Acer in Taiwan announced it would pay $710 million to buy PC maker Gateway, the US fourth largest.

With the acquisition, Acer would become the third largest in the world, overtaking Lenovo - and complicate the latter's bid for Packard Bell.

Gateway has the first right to buy Packard Bell under an earlier agreement, and so poses a challenge to Lenovo's plan to buy the European firm.

"The acquisition of Packard Bell is just one of many of our options," said Yang. "We never put all our bets on one deal."

He said even if Lenovo fails, the company has a contingency plan.

While Lenovo and Acer seek acquisitions, the consolidation of the industry is getting intense.

According to US research house iSuppli, the top five PC makers gained 9.2 percent of the market share from other competitors in the second quarter of this year.

Lenovo posted sparkling 23 percent quarter-on-quarter growth, much higher than HP's 4.4 percent or Dell's 5.6 percent. Acer's growth declined by 0.2 percent.

Wilson Wan, deputy general manager of US research firm IDC's China business, said the recent acquisitions have taken the competition to a higher level and players must try to expand faster to survive.

"We are always open to mergers and acquisitions, given our established capability from the integration of IBM's PC business, but we do not do it blindly," said 43-year-old Yang.

He said Lenovo's efforts to integrate the former IBM business has proved successful and the next goal is more about expanding business in all product categories and regions outside China.

Wan also said if Lenovo does not manage to acquire Packard Bell, it should shift its focus to organic operations.

"I think the next step for Lenovo is to strengthen distribution channels, which is more critical to succeed in markets outside China," Wan said.

Source: China Daily

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