Lenovo shares plummet 15% as investors question big dollar acquisitions
Chinese PC maker Lenovo's shares reportedly dropped by 15 percent as investors tried to make sense of its recent acquisitions, including the billion-dollar Google-Motorola deal.
Lenovo recently acquired Google's unprofiting Motorola Mobility unit for 2.91 billion dollars along with IBM's low-end business server for 2.3 billion dollars, bringing the total bill to 5.2 billion dollars.
However, investors started selling Lenovo shares owing to questions surrounding Motorola's profitability, the BBC reports.
Analysts and investors have expressed skepticism over how the firm would integrate the acquisitions into its overall corporate strategy.
Research firm IDC's Bryan Ma said that the industry should look to how Lenovo turned around IBM's ailing personal computer division, Think Pad in 2005, as an example of Lenovo's previous integration strategies.
Meanwhile, managing director at consulting firm Frost and Sullivan, Manoj Menon said that Lenovo would start resembling other big PC companies HP and Dell, both of whom are struggling with meeting investor expectations with the acquisitions and this could be the primary reason for concern amongst investors.
Menon further said that it would take Lenovo about 18 to 24 months if not longer, to deliver the results of its recent acquisitions as the PC industry makes a shift from desktop to tablet units based on cloud computing technology, the report added.
(Posted on 06-02-2014)