The growth in 2019 is also due to catching up with a wave of PC upgrades, which does not indicate that the market will continue to recover.
Lenovo Q3’s financial report also says: Lenovo has become the world’s largest computer brand, with a 24.8% market share. Despite critical shortages of key components, its personal computer business still maintains growth momentum, and its revenue and output The volume reached a record high in the quarter.
“Severe shortage of key components”, this sentence may also contain such information: component manufacturers are not optimistic about the continued warming of the medium and long-term PC market; Lenovo’s control of the PC industry chain is still not strong enough.
Being determined by market analysts is that the upgrading of PCs will become longer as the frequency of future hardware upgrades decreases (currently around 4-5 years). While smart terminals such as mobile phones are still rapidly iterating, 5G will bring new growth possibilities.
In 2019, global PC shipments increased to 260 million units, but only 17.7% of the 1.47 billion smartphones shipped in the same year. The status of the two generations is clear at a glance.
Lenovo Group, which has been trapped in the development of mobile internet for 10 years, seems almost impossible to catch up with its rivals.
At first, the brand matrix formed by Lenovo, ZUK and MOTO tried to take into account different market levels and market regions. However, while Chinese brands such as Huawei, Xiaomi, and OV have risen, Lenovo has been thrown away.
Since no clear and effective strategy has been found in the field of smart phones, the mobile phone-based mobile business has so far been a “chicken rib” in Lenovo’s smart device business group.
Although Lenovo ’s mobile business in Latin America, its “largest core market”, has grown much faster than the average market growth rate, its Q3 quarterly report also shows a 17% decline in its revenue.
The business revenue of USD 1.381 billion accounted for less than 15% of the Group’s total revenue. What’s more terrible is that although Lenovo’s mobile business has been profitable for 5 consecutive quarters, the profit before taxation of USD 3 million in Q3 was almost negligible .
Right now, global mobile phone shipments are affected by the market ’s own growth margin and the new crown epidemic. Analysts are generally looking down, and 5G has become a life-saving straw for major manufacturers, but obviously Lenovo ca n’t see any advantages to beat the miracle. .
Tail is too big
No wonder that capital market investors do not understand the laws of industrial development and the true meaning of “value investment.”
In terms of “growth”, the PC marketIt’s hard to see how much room for growth in the long run, let alone Lenovo’s new rivals such as Huawei and Xiaomi have also begun to show their heads; in the smart terminal market such as mobile phones, the weak Lenovo’s opponents are all like wolves.
The only thing that can make investors think about Lenovo Group is to rely on “transformation”. The problem is that the data center business carrying Lenovo’s software and services has not made investors expect much.
In the “Spring Festival Gala” of Lenovo Group in 2018, Yang Yuanqing toasted and vowed that in the future, Lenovo will “fully implement intelligent transformation around the three elements of intelligence (data, computing power, and algorithms) and try to accelerate intelligent transformation.”
At that time, the pressure of financial year performance loss made Yang Yuanqing determined to transform Lenovo to “become the enabler and enabler of the intelligent Internet generation” and proposed personal computer business, mobile business and data center business, “equipment + cloud 3S strategy.
To date, the data center business that shoulders Lenovo’s “transformation” is still losing money. Although there are a series of beautiful growth data on many details, its contribution to the Group’s revenue is only 7%.
The “self-sufficient” growth data cannot convince investors of what expectations Lenovo has in strategic transformation. It is important to know that Lenovo faces Google, Microsoft, IBM, Amazon, Huawei, Ali, A long list of powerful rivals such as Tencent, Baidu and Ping An.
In fact, you only need to look at a number, and investors may shake their heads.
In fiscal year 2018/2019, Lenovo Group reported revenue of US $ 51 billion, a record high for the company’s fiscal year. However, this fiscal year, Lenovo’s R & D expenses were only 1.266 billion US dollars, accounting for only 2.48% of total revenue, and have fallen for 4 consecutive years.
R & D investment as a percentage of total revenue is almost the first indicator of the competitiveness of technology companies. In the trend and absolute value of this data, Lenovo does not look like a technology company at all.
Lenovo Group has the absolute investment ratio and R & D costs Far less than global technology giants such as Google, Microsoft, Huawei, Samsung, not to mention its transformation of new tracks and the cultivation of new growth points are always “post-knowledge.”
“Companies need to maintain stable performance growth, so they will put the center on shipments, R & D and innovation are second.” Such comments, Lenovo is actually no shortage of comments.
But investors have to accept another reality. If Lenovo Group is not stable in the PC industry,Brother’s throne, where does the data above the industry profit index come from? After all, the current performance is also the best shy cloth.
Moreover, Lenovo ’s current situation is a plan laid out in December 2004.
From the motivation, logic, and results of the merger itself, it’s hard to say that Lenovo’s $ 1.75 billion acquisition of IBM’s PC business was a mistake. After all, through this merger and acquisition, Lenovo opened the door to the global market and quickly entered the ranks of the giants, laying the foundation for later dominating the PC industry.
But looking back at the behavior of IBM’s “cutting meat” PC business today, you will find that “Blue Blood Giant” started its “hard” and “soft” after this world-renowned asset transaction Anchor the strategic layout of relying on services to obtain greater profits.
Before the PC business was sold, IBM acquired PricewaterhouseCoopers, rational software, and Maersk Data. You need to know that these companies were popular data, software, and service companies at the time.
After the sale of PC assets, IBM is more focused on information technology and business solutions, which means that 15 years ago, IBM “gambled” on the transformation of information technology and big data.
In 2005, the information technology business accounted for 52% of IBM’s revenue, and by 2018 it had risen to 81%. IBM, which has overwhelmed Microsoft and Intel, is still strengthening its original transformation through continuous mergers and acquisitions.
In its report on the bearish Lenovo Group, Bucephalus mentioned that Lenovo’s endogenous growth is not clear enough, and it is more dependent on the growth brought by mergers and acquisitions.
Actually, this is a very thief of Bucephalus who dug a hole for Lenovo. On the one hand, Lenovo’s PC business and mobile business are indeed heavily dependent on mergers and acquisitions; on the other hand, it is a direct stamp on Lenovo’s distress in new business.
However, the growth brought about by asset mergers and acquisitions integration is precisely the main reason why many giant companies can complete strategic transformation. Not only IBM, but Dell and Hewlett-Packard, which have been fighting with Lenovo so far, are also trying to achieve transformation through mergers and acquisitions.
Lenovo responded to Bucephalus’s doubt that its asset-liability ratio was too high, and pulled out HP and Dell to “back up”, saying that in the latest fiscal quarter, HP’s asset-liability ratio was as high as 105%, and Dell’s 95.88% debt ratio was also much higher than Lenovo.
This fifty-step laugh and a hundred-step response can’t add points to Lenovo at all.
Looking at Dell Technology’s fiscal 2019 financial report, its ISG (Network and Storage Infrastructure Solutions Group) revenue was US $ 36.7 billion, an increase of 19%; CSG (Client Solutions Group) annual revenue $ 43.2 billion, up 10%; VMware (cloud computing company)Revenue of $ 9.1 billion, an increase of 14% …
Dell, which used the PC as its nameplate, is now Dell Technology with more diversified and balanced revenue. Most of ISG, CSG, and VMware’s operating assets were acquired by Dell.
In September 2016, Dell spent $ 67 billion to complete the acquisition of data storage company EMC, creating the largest merger and acquisition of a technology company in history. Of course, the ultra-high asset-liability ratio is also a by-product of its mergers and acquisitions.
The HP industry, which is most similar to Lenovo in the PC industry, is changing its situation of relying heavily on the PC business and the declining printing business through asset splits and mergers and acquisitions.
Just this month (March 2020), HP spent $ 11 billion to acquire Autonomy, a big data software company. Perhaps HP has long been tired of comparing Lenovo with it.
You don’t need to know that the debt structure of these two companies must be different from that of Lenovo Group. After all, Lenovo is still a company that sells products, and its current liabilities account for a large proportion.
Then, Lenovo, who has been criticized for “no sign of transformation,” has to find transformation opportunities in the tens of billions of dollars of asset mergers and acquisitions. How many investors think it can?
Proposition of 1 billion shares
On mergers and acquisitions, Lenovo in the era of Liu Chuanzhi “snake elephants” IBM’s PC business, and also achieved one of the most classic overseas mergers and acquisitions of Chinese companies.
Lenovo in the era of Yang Yuanqing has been able to attract market attention. Both transactions took place in 2014: US $ 2.3 billion took over IBM’s X86 server; US $ 2.9 billion came from Google singers. Google spent $ 12.5 billion in the acquisition of Motorola Mobility).
I don’t know why, there is always a hazy sense of “urban legend” in these two mergers. In short, neither X86 nor the repackaged Motorola seems to have brought significant changes to Lenovo’s growth or transformation.
A long time ago, Michael Dell was thinking about the changes in rules brought by Amazon AWS, Microsoft Azure, and Google Cloud. There are still many opportunities for integration in the server, storage, and network fields.
However, in addition to the debts that are clearly visible each year, how to solve Dell ’s development in cloud computing and other market areas since investors are encouraged to take out more than 60 billion US dollarsThe problem is still hazy. This makes Dell Technology investors want to “kick Michael Dell out.”
Of course, such a thing is unlikely to happen to Lenovo Group and Yang Yuanqing.
Because of the total 12 billion share capital of Lenovo Group, Yang Yuanqing holds more than one billion shares (as of December 1, 2019, flush flush data shows that Yang Yuanqing holds 4,218,700 shares of Lenovo Group 107, accounting for 8.94%).
Two years ago, Ni Guangnan, an academician of the Chinese Academy of Engineering, compared the development of Lenovo and Huawei over the past three decades. He believes that one of the reasons why Huawei can be more successful than Lenovo is that its equity structure is more reasonable, and a large number of scientific and technological personnel have become companies. Shareholders, thus driving Huawei’s continuous growth.
In fact, the early experience of going public, cross-border mergers and acquisitions, and the appointment of global professional managers have greatly enhanced Lenovo’s image as a modern corporate standardized governance.
But we can also observe that after experiencing the game and integration of “rule of man” and “legal system”, many Chinese companies have begun to evolve new organizational ecology and governance structures.
Huawei, Haier, Suning, Ali, JD.com and even new-generation companies such as Byte Beat are exploring the internal governance system that can stimulate the innovation and creativity of employees and standardize the development of modern enterprise systems.
Clearly at this level, Lenovo is closer to the management form of mature western companies, but is this suitable for the rapid development and change of the local environment? Lenovo should reflect on this issue at least from the perspective of the slow pace of others’ development.
During the Lenovo Global Four Place Oath Masters Conference in 2018, Lenovo’s public relations department tried to create a CEO image of “flying man” for Yang Yuanqing, in order to highlight the rapid development of global Lenovo.
But it was at a time when Lenovo Group’s development was as thin as ice, and it was necessary to make a difference. A leader who appeared in exhibition market activities around the world all year round made 1 billion shares of key gentlemen look more like a super Sales.
Although it is only a small detail, it is not beneficial from the outside world’s perception and judgment of the development of Lenovo Group. In fact, such a similar problem Lenovo repeatedly repeats.
Remember that in the past two years, Lenovo has made a mistake, apologized, and suffered verbal criticism on the question of whether it is a “Chinese company” or a “global company”?
Actually, this is a very complicated question. Especially in today’s environment where geopolitics is beginning to prevail and economic globalization is ebb, Lenovo, which advertises itself as a global company, is facing an awkward situation.
In many overseas markets, Lenovo will still be considered a familyChinese companies, selling PC tablets are harmless to humans and animals. If you want to develop “new infrastructure” business, I am afraid it will not be so easy.
Thus, the local market will be crucial for Lenovo to transform its new business. Regardless of whether the outside world is questioning the decline of its PC and mobile phone business in the local market, or when it is mentioned that the impact of the new crown epidemic on Lenovo, its senior executives like to emphasize that Lenovo can balance some impact through the global market layout.
This is not a good answer. Obviously, for Lenovo Group, on the two propositions of growth and transformation, they need to initiate reflection from the top down and reflect on every detail.
Episode
The revolution has not yet succeeded, and comrades need to work hard. To become a respected entrepreneur, create a strong enterprise, and achieve a great country, we still have too much room for progress.
Lenovo, Huawei, who have been developing for 30 years, and more companies and entrepreneurs who will become Lenovo and Huawei in the future, should find more things that can be perfect from each step of growth, not content with digital changes .
Lenovo Group has the absolute investment ratio and R & D costs Far less than global technology giants such as Google, Microsoft, Huawei, Samsung, not to mention its transformation of new tracks and the cultivation of new growth points are always “post-knowledge.” On mergers and acquisitions, Lenovo in the era of Liu Chuanzhi “snake elephants” IBM’s PC business, and also achieved one of the most classic overseas mergers and acquisitions of Chinese companies.
Lenovo in the era of Yang Yuanqing has been able to attract market attention. Both transactions took place in 2014: US $ 2.3 billion took over IBM’s X86 server; US $ 2.9 billion came from Google singers. Google spent $ 12.5 billion in the acquisition of Motorola Mobility).
I don’t know why, there is always a hazy sense of “urban legend” in these two mergers. In short, neither X86 nor the repackaged Motorola seems to have brought significant changes to Lenovo’s growth or transformation.
A long time ago, Michael Dell was thinking about the changes in rules brought by Amazon AWS, Microsoft Azure, and Google Cloud. There are still many opportunities for integration in the server, storage, and network fields.
However, in addition to the debts that are clearly visible each year, how to solve Dell ’s development in cloud computing and other market areas since investors are encouraged to take out more than 60 billion US dollarsThe problem is still hazy. This makes Dell Technology investors want to “kick Michael Dell out.”
Of course, such a thing is unlikely to happen to Lenovo Group and Yang Yuanqing.
Because of the total 12 billion share capital of Lenovo Group, Yang Yuanqing holds more than one billion shares (as of December 1, 2019, flush flush data shows that Yang Yuanqing holds 4,218,700 shares of Lenovo Group 107, accounting for 8.94%).
Two years ago, Ni Guangnan, an academician of the Chinese Academy of Engineering, compared the development of Lenovo and Huawei over the past three decades. He believes that one of the reasons why Huawei can be more successful than Lenovo is that its equity structure is more reasonable, and a large number of scientific and technological personnel have become companies. Shareholders, thus driving Huawei’s continuous growth.
In fact, the early experience of going public, cross-border mergers and acquisitions, and the appointment of global professional managers have greatly enhanced Lenovo’s image as a modern corporate standardized governance.
But we can also observe that after experiencing the game and integration of “rule of man” and “legal system”, many Chinese companies have begun to evolve new organizational ecology and governance structures.
Huawei, Haier, Suning, Ali, JD.com and even new-generation companies such as Byte Beat are exploring the internal governance system that can stimulate the innovation and creativity of employees and standardize the development of modern enterprise systems.
Clearly at this level, Lenovo is closer to the management form of mature western companies, but is this suitable for the rapid development and change of the local environment? Lenovo should reflect on this issue at least from the perspective of the slow pace of others’ development.
During the Lenovo Global Four Place Oath Masters Conference in 2018, Lenovo’s public relations department tried to create a CEO image of “flying man” for Yang Yuanqing, in order to highlight the rapid development of global Lenovo.
But it was at a time when Lenovo Group’s development was as thin as ice, and it was necessary to make a difference. A leader who appeared in exhibition market activities around the world all year round made 1 billion shares of key gentlemen look more like a super Sales.
Although it is only a small detail, it is not beneficial from the outside world’s perception and judgment of the development of Lenovo Group. In fact, such a similar problem Lenovo repeatedly repeats.
Remember that in the past two years, Lenovo has made a mistake, apologized, and suffered verbal criticism on the question of whether it is a “Chinese company” or a “global company”?
Actually, this is a very complicated question. Especially in today’s environment where geopolitics is beginning to prevail and economic globalization is ebb, Lenovo, which advertises itself as a global company, is facing an awkward situation.
In many overseas markets, Lenovo will still be considered a familyChinese companies, selling PC tablets are harmless to humans and animals. If you want to develop “new infrastructure” business, I am afraid it will not be so easy.
Thus, the local market will be crucial for Lenovo to transform its new business. Regardless of whether the outside world is questioning the decline of its PC and mobile phone business in the local market, or when it is mentioned that the impact of the new crown epidemic on Lenovo, its senior executives like to emphasize that Lenovo can balance some impact through the global market layout.
This is not a good answer. Obviously, for Lenovo Group, on the two propositions of growth and transformation, they need to initiate reflection from the top down and reflect on every detail.