Industry leader Lenovo made headlines this past week following statements made by CEO Yang Yuanqing at a shareholder meeting. Yuanqing said that despite Lenovo’s recent series of acquisitions, they do not intend on slowing down anytime soon. In fact, Yuanqing said that Lenovo will continue to grasp good opportunities that present themselves, and will continue to use acquisitions as a way to grow.
Not everyone is so supportive of Yuanqing’s bold announcement. Many stakeholders fear that, having just spent over $5 billion on two acquisitions, Lenovo may be spreading their resources across too many channels and risk losing financial maneuverability in the short term.
Though Lenovo is a highly regarded company with a mammoth global influence, there are a number of reasons why this has people concerned. Historically, businesses that grow too quickly run into trouble covering their growing expenses. What typically follows this struggle is mass layoffs intended to stop the bleeding. Mass layoffs open Pandora’s Box in terms of public relations, media relations, branding, and negative publicity – all of which ultimately impact the company in question and all of its stakeholders.
On December 31, 2013 Lenovo issued a financial report wherein it was stated that the company had $3.4 billion in cash reserves. While the company has access to several billions of dollars more than that, the company has gone on record that they would not hesitate to tap into fund raising or bank loans should the right acquisition opportunity present itself.
Lenovo’s acquisition history.
Just how far has Lenovo come over the years?
- After 21 years in business, Lenovo made its first procurement in 2005 with IBM’s personal computer division. This gave Lenovo ownership of some of the most-loved business grade PCs, the ThinkPad.
- In 2011, Lenovo embarked on a joint venture with Japanese electronics company NEC, with the intention of expanding Lenovo’s reach into the Japanese market.
- June 2011 saw the acquisition of Medion, a German electronics company, in order to double Lenovo’s share of the German computer market.
- 2012 marked Lenovo’s venture to gain regional growth in their Brazilian market with the acquirement of electronics company CCE.
- In August 2012, EMC2 and Lenovo merged to form LenovoEMC2, which would offer network attached solutions for small and medium sized business.
- September 2012, Lenovo acquires U.S. based software company Stoneware in order to gain access to new technology.
- January 2014, Lenovo announced Motorola Mobility from Google for almost $3 billion. This deal gives Lenovo rights to Motorola’s extensive lines of smartphones, and along with the acquisition came Yuanqing’s declaration that Lenovo would make Motorola profitable in just six quarters.
From our perspective, we are curious to see where Lenovo extends to next! Lenovo has earned its spot as an industry giant for certain, and with their previous track record, Yuanqing’s promise to keep the company growing stands to hold water.