Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      World Bank set to back South Africa’s big energy grid roll-out

      20 June 2025

      The algorithm will sing now: why musicians should be worried about AI

      20 June 2025

      Sita hits back at critics, promises faster, automated procurement

      20 June 2025

      The transatlantic race to create the first television

      20 June 2025

      Listed: All the MVNOs in South Africa – 2025 edition

      19 June 2025
    • World

      Watch | Starship rocket explodes in setback to Musk’s Mars mission

      19 June 2025

      Trump Mobile dials into politics, profit and patriarchy

      17 June 2025

      Samsung plots health data hub to link users and doctors in real time

      17 June 2025

      Beijing’s chip champions blacklisted by Taiwan

      16 June 2025

      China is behind in AI chips – but for how much longer?

      13 June 2025
    • In-depth

      Meta bets $72-billion on AI – and investors love it

      17 June 2025

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      Grok promised bias-free chat. Then came the edits

      2 June 2025

      Digital fortress: We go inside JB5, Teraco’s giant new AI-ready data centre

      30 May 2025

      Sam Altman and Jony Ive’s big bet to out-Apple Apple

      22 May 2025
    • TCS

      TCS+ | AfriGIS’s Helen Hulett on how tech can help resolve South Africa’s water crisis

      18 June 2025

      TechCentral Nexus S0E2: South Africa’s digital battlefield

      16 June 2025

      TechCentral Nexus S0E1: Starlink, BEE and a new leader at Vodacom

      8 June 2025

      TCS+ | The future of mobile money, with MTN’s Kagiso Mothibi

      6 June 2025

      TCS+ | AI is more than hype: Workday execs unpack real human impact

      4 June 2025
    • Opinion

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025

      Beyond the box: why IT distribution depends on real partnerships

      2 June 2025

      South Africa’s next crisis? Being offline in an AI-driven world

      2 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » World » Lenovo’s troubles may be far from over

    Lenovo’s troubles may be far from over

    By Agency Staff28 February 2018
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    In four years, Lenovo Group went from would-be Apple challenger to an also-ran in smartphones and data centre servers. Now it’s got a comeback plan, but some investors don’t buy it.

    China’s erstwhile tech darling, which lost its perch atop the PC market to HP in 2017, has shed two-thirds of its value since hitting a 15-year high in 2015. At a two-year earnings multiple of about 10 times, its stock is cheapest among the world’s largest computer makers. Yet all seven analysts ranked best by Bloomberg based on one-year returns urge investors to sell. Their average target puts Lenovo 13% below Tuesday’s close.

    From money-haemorrhaging businesses to resurgent competition for its cash-cow PC division and a revolving-door executive team, the company that once aspired to Apple and Samsung’s heights seems to have lost its way. CEO Yang Yuanqing’s failed repeatedly to deliver on turnaround deadlines and hasn’t fully articulated a strategy to revive ailing mobile and data centre arms — even as local rivals gun for its bread-and-butter Chinese customer base. The company’s even resorted to selling office buildings to prop up the bottom line.

    Lenovo’s been caught in the middle of a very awkward situation where it can neither turn the tables on its home turf nor expand quickly enough in overseas markets

    “I just don’t see signs of change,” said Qian Kai, an analyst with CICC who’s covered Lenovo for five years and the third-ranked analyst of 30 in Bloomberg’s Absolute Return Rankings. He lowered his target price to HK$2.60 in February. “Lenovo’s been caught in the middle of a very awkward situation where it can neither turn the tables on its home turf nor expand quickly enough in overseas markets.”

    It’s a far cry from the days when Lenovo was at the top of its game. Yang took the stage at an 18 000-seat Beijing arena one frigid winter’s evening in 2014 to surprise euphoric employees with news Lenovo had agreed to take over IBM’s commodity server business for more than US$2bn. That same year, it sealed a deal to buy Motorola Mobility from Google, becoming the world’s number three smartphone label.

    That was then. The Moto line has tumbled out of the top ranks, unable to expand its footprint in the US and pummelled by fast-moving rivals in Asia from Oppo to Xiaomi. Liu Chuanzhi, an industry trailblazer who transformed Lenovo into one of China’s most recognizable brands, fell on his sword during this year’s address.

    “How many mistakes have we made? How many mistakes have I myself made?” Liu said in February. “Without question, today’s Lenovo Group faces severe and acute challenges. The challenge is multi-dimensional and uncertain. It’s an age when innovations in technology and business model are powerful enough to overturn an industry and even social customs.”

    New avenues

    Lenovo’s now overhauling its sales channel. It’s re-enlisted Liu Jun — the architect of the Motorola deal — to reinvigorate China via new avenues such as e-commerce.

    “Turning around the business is still our goal, but we probably need more quarters to deliver that result,” Yang said in an interview in February. “We are transitioning in emerging markets from Lenovo brand to Motorola brand, it hasn’t gone very well. We need to clear inventory and rebuild the brand.”

    It also missed out on “its best shot” to grow its server business, Qian said. At the time the IBM deal was unveiled, Chinese customers were starting to eschew IBM, Oracle and EMC in favour of local names. Many ended up with Huawei or Inspur because Lenovo took eight months to close its acquisition.

    Lately, the company’s shown signs of life. It’s expected to return to (meagre) revenue growth this fiscal year after two successive annual declines. But at least one fund manager warns against getting into a PC sector that remains sluggish at best.

    “The industry is unlikely to see hyper-growth in the short run,” said Zhang Haidong, a fund manager with Jinkuang Investment Management who doesn’t own stock in Lenovo. Even “the smartphone business may not see its next inflection point until 2019”.

    Alexander Medd, an analyst with Bucephalus Research who’s been one of Lenovo’s harshest critics, argues the company needs cool products. But it may be too late.

    “Tech brands do not come back,” he said.  — (c) 2018 Bloomberg LP



    IBM Lenovo Motorola top Yang Yuanqing
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleStandard Bank downtime causes frustration
    Next Article Amazon goes open source to beat Google into cars

    Related Posts

    IBM sets sights on practical quantum computing by 2029

    11 June 2025

    Silicon slip-ups: the tech industry’s biggest flops

    29 May 2025

    Scaling enterprise productivity with AI – a must-attend event for business leaders

    21 May 2025
    Company News

    Making IT happen: how Trade Link gears up to enable SA retail strategies

    20 June 2025

    Why parents choose CambriLearn for online education

    19 June 2025

    Disrupt first, ask questions later – the uncomfortable truth about incident response

    18 June 2025
    Opinion

    South Africa pioneered drone laws a decade ago – now it must catch up

    17 June 2025

    AI and the future of ICT distribution

    16 June 2025

    Singapore soared – why can’t we? Lessons South Africa refuses to learn

    13 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.