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Lenovo No. 3 smartphone maker after acquiring Motorola [The News & Observer (Raleigh, N.C.)]
[October 30, 2014]

Lenovo No. 3 smartphone maker after acquiring Motorola [The News & Observer (Raleigh, N.C.)]


(News & Observer (Raleigh, NC) Via Acquire Media NewsEdge) Oct. 30--No. 1 PC maker Lenovo has accelerated its diversification into other devices now that it has completed its acquisition of the Motorla handset business, a move that gives it entree into the U.S. smartphone market.



Lenovo announced Thursday that it has completed its $2.91 billion acquisition of Motorola Mobility from Google, a deal that was announced in January.

With the acquisition, Lenovo moves up to become the world's No. 3 smartphone company.


"With Motorola's capabilities, we are ready to move fully into the mobile era," Lenovo CEO Yang Yuanqing said in a conference call with reporters.

The Motorola business has struggled in recent years but boasts a well-known brand name -- a brand that is being maintained.

Motorola will operate as a wholly owned subsidiary of Lenovo, which is based in China and has a headquarters in Morrisville. Motorola's headquarters will remain in Chicago.

In addition, Yang said Motorola's business has been "significantly improving," in the past year.

"Losses are down, revenue is improving," he said.

Yang also said he remains confident that Lenovo can turn around the money-losing business and make it profitable within four to six quarters.

"We will collaborate to create a stronger, tougher competitor in the global market," he said. "We have done this before in PCs and we will do it again in smartphones." Lenovo acquired IBM's PC business in 2005, a deal that made it a player in the U.S. market and helped it eventually become the world's largest computer maker.

Without the Motorola business, Lenovo tied for fourth in worldwide smartphone shipments with LG -- behind Samsung, Apple and Chinese rival Xiaomi -- in the third quarter, according to data released this week by market research firm IDC. Lenovo's third-quarter shipments rose 38 percent, outpacing the overall market.

Lenovo is adding nearly 3,500 Motorola employees worldwide, including about 2,800 in the U.S.

The Motorola business will continue to be led by Motorola veteran Rick Osterloh, who remains president and chief operating officer. Osterloh became CEO in April after his predecessor, Dennis Woodside, left to become chief operating officer at Dropbox.

Liu Jun, president of Lenovo's mobile business group, also is serving as chairman of the Motorola management board.

Osterloh said joining Lenovo will be a big plus for Motorola's business.

"This presents a great opportunity for us to scale our business around the world," he said.

One of the key benefits of the deal, Osterloh added, is that Motorola will be able to leverage the Lenovo supply chain in markets around the world -- and vice-versa.

The two mobile businesses are "very complementary," said Yang, noting that Motorola's presence is greatest in North America and Latin America while Lenovo's strength is in emerging markets.

Jeff Meredith, vice president of marketing for Lenovo's mobile business group, said in an interview that Motorola's launch of the Moto X line of smartphones about a year ago marked a resurgence of the brand. He called the Moto X "a mainstream to premium-class product that received very strong press feedback as one of the best Android phones ever." Last month Motorola launched a smartwatch, the Moto 360, that also has won press acclaim, Meredith said.

Last month Lenovo completed a $2.1 billion acquisition of a line of servers from IBM, which made it the No. 3 player in the global server market.

Lenovo executives declined to comment directly on persistent Wall Street speculation that the company is interested in yet another major deal -- buying the financially ailing Blackberry.

However, Yang nonetheless appeared to throw cold water on the possibility by saying: "We definitely need to focus on the integration of these two big deals." Ranii: 919-829-4877 ___ (c)2014 The News & Observer (Raleigh, N.C.) Visit The News & Observer (Raleigh, N.C.) at www.newsobserver.com Distributed by MCT Information Services

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