Lenovo pledges to restore Motorola profits

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Aims to make the US manufacturer profitable within the next four to six quarters following the completion of its £1.82 billion acquisition of the company  

Lenovo has vowed to return  Motorola Mobility to profitability within 18 months, after its £1.82 billion purchase of the US firm from Google was finally completed on October 30.

Lenovo chairman and chief executive officer Yang Yuanqing said:“Motorola brings a strong presence in the US, North America and Latin America, as well as an iconic brand. Lenovo has a strong presence in China and other emerging markets. Motorola benefits from Lenovo’s operational excellence and reach and are confident the business can become profitable in four to six quarters”.

Motorola will operate as a wholly-owned subsidiary, with the brand and trademark remaining.

Its headquarters in Chicago will also remain, with Lenovo integrating nearly 3,500 global Motorola employees, 2,800 of which are based in the US.

Google will maintain ownership of an unspecified majority of Motorola’s patent portfolio, with the latter receiving a license to this and other intellectual property. It will also retain over 2,000 patent assets.

Out of the black 
As a result of the acquisition, Lenovo executive vice president and president of its Mobile Business Group Liu Jun has become chairman of the Motorola Management Board, while Rick Osterloh remains as president and COO of Motorola.

In a conference call with analysts to discuss the acquisition shortly after it was announced, Yang said he is confident of taking Motorola out of the black within the next four-to-six quarters.
In July, Google revealed it made a loss of $68 million in Q2 (three months ending June 30), but this compared favourably to a heavy deficit of $454 million in the same quarter a year earlier. Motorola doubled unit sales from a year earlier to 8.6 million, while revenue was up by almost a quarter to $15.96 billion.

Yang said that by combining capabilities and expansive global reach from both organisations and replicating its success in the PC market, Motorola will once again be a force to be reckoned with in the global smartphone space.

According to analyst Gartner,  Lenovo maintained its position as the world’s leading PC vendor in Q3.  Sales were up 11.4 per cent year-on-year to 15.7 million units, with its market share rising 2.1 per cent from a year ago to 19.8 per cent.

“We have achieved another successful milestone with the completion of the acquisition of Motorola Mobility,” said Yang.

“It is already winning in the market and its recent results show why it can be such a strong growth engine for Lenovo in the future.

“We have important work ahead of us to integrate the companies but as this is one of our core strengths, Lenovo and Motorola will collaborate to create a stronger and tougher competitor in the global market. We have done this before in PCs, and we will do it again in smartphones.”

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