Lenovo CEO Yang Yuanqing is confident the company’s manufacturing prowess will enable it to transform the Motorola Mobility mobile phone business it is buying from Google into a profitable venture within four to six quarters.
“Don’t be scared by the $1 billion-a-year loss,” Yang told Bloomberg News during an interview at the Mobile World Congress in Barcelona Monday. “We will improve that even from day one. Google is very good at software, ecosystems and services. But we are stronger in the manufacturing of devices.”
Yang also said during the interview that the turnaround would rely on increased production and sales in emerging markets as well as cost-cutting. Lenovo expects to close on the Motorola acquisition later this year; the turnaround timetable outlined by Yang would begin nwhen Lenovo takes over the operation.
Lenovo is based in China and has a headquarters in Morrisville that employs about 2,200 workers. The company became the No. 1 PC maker last year thanks to sales that well outpaced the market, but it has been moving aggressively into other devices as the overall PC market has sagged.
Last month the company announced two major acquisitions that will cost it more than $5 billion. It agreed to acquire IBM’s low-end server business, which will transform Lenovo from an also-ran to the No. 3 server company worldwide, and the following week agreed to buy Motorola Mobility. Acquiring Motorola would make Lenovo the No. 3 smartphone maker worldwide and give it a name brand in the United States and Europe, where it doesn’t currently sell phones.
The IBM deal would nearly double the company’s presence in North Carolina.
Investors have been skeptical about the Motorola deal. Since the acquisition was announced the company’s stock-like American depositary receipts have fallen more than one-third. Tuesday morning the ADRs were trading at $20.02, down 26 cents.