Beijing-based Lenovo recently announced its plans to acquire two major businesses. The company picked up Motorola Mobility from Google for $2.91 billion. It also purchased IBM’s server business for $2.3 billion, Lenovo previously purchased the company’s PC division back in 2005 for $1.25 billion. The idea behind these acquisitions is to accelerate Lenovo’s growth in these particular market segments. Lenovo has said that it won’t shy away from writing more cheques in the future for additional acquisitions.
When it comes to taking stagnant businesses and making them profitable, the company has significant experience under its belt. After purchasing IBM’s PC division in 2005, Lenovo built up the ThinkPad brand into the behemoth it is today, even passing HP in overall global PC shipments last year. The acquisition of Motorola Mobility not only gives it talent, but a brand recognition and distribution channel rooted deep within the West.
Lenovo doesn’t plan on laying off more employees at Motorola Mobility. CEO Yang Yuanqing said at the company’s shareholder meeting that remaining employees, with most of them being engineers, will be helpful in Lenovo’s product development in mature markets. The company feels that it will be able to make Motorola Mobility profitable in four to six quarters.
Its unclear right now what Lenovo’s next acquisition might be. Multiple rumors in the past have indicated its willingness to pick up a well known mobile device company. At one time Lenovo was also consistently rumored to be interested in acquiring BlackBerry, but the Canadian manufacturer is no longer in a mood to sell. Industry analysts expect that Lenovo could very well become the second largest Android vendor in the future, trailing behind Samsung.
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