Lenovo Admits $3 Billion Motorola Acquisition ‘Did Not Meet Expectations’ And Lacked Synergy
Lenovo's business savvy isn't called into question all that often. The Chinese outfit climbed its way to the top in PC sales and has managed to not only retain pole position, but defy market conditions by continually growing PC sales when sales across the board are down as a whole. However, not every decision Lenovo makes is a good one, such as buying Motorola.
Acquiring Motorola from Google was a play into the seemingly fashionable mobile sector. Lenovo already competes in mobile with a line of its own brand handsets, but scooping up Motorola would give it a larger presence, especially in territories outside of China. Or so Lenovo thought. Rather than turn into the cash cow that Lenovo hoped, Motorola accounted for 5 million device shipments and $1 billion in revenues for its fiscal fourth quarter ended March 31, 2016. As a whole, Lenovo shipped 10.9 million Android tablets, smartphones, and smart TVs during the quarter.
"These results show integration efforts did not meet expectations. In particular, China shipments declined 85 percent as the business shifted focus to open market and higher price bands and product transition in North America was not successful," Lenovo said. "Lenovo has learned a great deal since the close of the Motorola acquisition and is applying learnings quickly, with actions in organization, leadership and approach. The two new co-presidents focused on China and the rest of the world (RoW) now have the right focus."
While Lenovo struggled to execute its game plan in mobile, it remains the top dog in PCs. Lenovo strengthened its position as the largest PC OEM by increasing its market share 1.3 percent to 21 percent, though at the same time, it struggled like every other OEM with declining demand. Lenovo shipped 12.1 million PCs in the quarter, enough to bring in $6.2 billion, which is down 20 percent year-over-year.
"Lenovo will attack new growth areas – such as gaming and detachables – in the expanded PC market and continue to take advantage of consolidation to strengthen revenue performance," Lenovo said.
Acquiring Motorola from Google was a play into the seemingly fashionable mobile sector. Lenovo already competes in mobile with a line of its own brand handsets, but scooping up Motorola would give it a larger presence, especially in territories outside of China. Or so Lenovo thought. Rather than turn into the cash cow that Lenovo hoped, Motorola accounted for 5 million device shipments and $1 billion in revenues for its fiscal fourth quarter ended March 31, 2016. As a whole, Lenovo shipped 10.9 million Android tablets, smartphones, and smart TVs during the quarter.
"These results show integration efforts did not meet expectations. In particular, China shipments declined 85 percent as the business shifted focus to open market and higher price bands and product transition in North America was not successful," Lenovo said. "Lenovo has learned a great deal since the close of the Motorola acquisition and is applying learnings quickly, with actions in organization, leadership and approach. The two new co-presidents focused on China and the rest of the world (RoW) now have the right focus."
While Lenovo struggled to execute its game plan in mobile, it remains the top dog in PCs. Lenovo strengthened its position as the largest PC OEM by increasing its market share 1.3 percent to 21 percent, though at the same time, it struggled like every other OEM with declining demand. Lenovo shipped 12.1 million PCs in the quarter, enough to bring in $6.2 billion, which is down 20 percent year-over-year.
"Lenovo will attack new growth areas – such as gaming and detachables – in the expanded PC market and continue to take advantage of consolidation to strengthen revenue performance," Lenovo said.
