Lenovo Takes Control Of Fujitsu’s PC Unit

Lenovo has taken a controlling stake in Fujitsu’s PC unit, ending a year of uncertainty surrounding the division.

The Chinese tech giant said that alongside the Development Bank of Japan (which will have a 5 percent stake), it would take a take a 51 percent stake in Fujitsu Client Computing Ltd, and the three firms have formed a joint venture for the business.

The value of the deal is at least $157 million (£119m), but the deal could cost Lenovo as much as $269 million (£203m) based upon performance of the unit until 2020.

PC Acquisition

Lenovo and Fujitsu have been in talks about the unit since October last year. However there has been uncertainty surrounding Fujitsu’s PC unit for a while now.

Fujitsu of course had already spun off its PC unit back in February 2016 and at one stage there was talk of Japanese system makers Toshiba, Fujitsu and Vaio forming their own joint venture that would combine their respective PC units into a single business. They hoped that move would allow them to better compete with Lenovo, HP Inc., Dell and other top OEMs.

But now it seems that the future of the unit has been decided and will be owned in part by Lenovo,  Fujitsu and the Development Bank of Japan.

The acquisition of the controlling stake in the unit comes as Lenovo reported a dip in profits but also its strongest revenue growth in two years.

For the second quarter ending 30 September, Lenovo posted a 11 percent in profit down to $139m (£105m) as it admitted that market conditions remained challenging.

However revenue rose 5 percent to $11.8bn (£8.9bn), beating market expectations of $11.3bn.

Lenovo has recently been surpassed by HP as the leading PC supplier in the global market, and its mobile business has struggled to make an impact, despite its acquisition of Motorola for $2.9bn (£2.2bn).

Three Wave

However the company said that quarter-to-quarter revenue gains were achieved in all three of its main businesses, namely data centre, mobile, and PCs and smart devices.

“In the last quarter we continued to make progress in transforming our business by executing our 3-wave strategy,” said Yang Yuanqing, Lenovo Chairman and CEO. “We maintained industry leading profitability in our PC business and outgrew the market year-on-year.”

“In our Data Centre business our transformation is taking effect with a strengthened sales force, new global channel structure and programs, and new product competitiveness,” said Yuanqing. “Our mobile business turnaround is still in progress, and in most markets we saw strong premium to market growth.”

“The combination of strong execution and building solid foundations continue to be Lenovo’s strength,” he concluded. “The turnaround of our business in Brazil is a good example of that. We will continue to invest in building foundation and core competence for the two new growth engines, which will bring stable and sustainable returns.”

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