“Lenovo is in trouble …”
So begins a blog at Barron’s.
Lenovo faces trouble on all of its three big product markets – PCs, smartphones and servers – leading an analyst firm to slash its rating on Lenovo shares to “Sell.”
The analyst at BNP Paribas warned the No. 1 PC maker faces pressure as computer sales worldwide decline this year.
And Lenovo’s recent shakeup in its mobile group is just one sign of the company’s struggles with declining market share in its key smartphone market of China.
Then there is pressure on the server group.
New products keep coming from Lenovo – a “PC on a stick” that has been well received, and a new smartphone from Motorola reportedly is on the way. Lenovo also is hyping to the max new “killer” smartphones in India.
Lenovo invested heavily in Motorola Mobility, thus rising to No. 3 in global smartphone sales. But woes in China are substantial, BNP warns.
Lenovo also bought IBM’s x86 server business a year ago but recently made layoffs in that group.
Barron’s picked up the analyst’s warning, citing at length a passage about Lenovo’s woes in China smartphones:
“Lenovo had been the leading smartphone player in China, thanks to its strong telco relationship. However, following aggressive cuts to operators’ subsidies since 2014, and rising competition from local peers like Xiaomi, Huawei, OPPO, BBK/VIVO [none listed], Lenovo’s share has declined significantly. Telco operators’ share of the Chinese smartphone market is now probably only 30%, from 50%+ prior to 2014, while the open channel and online market now share over 70%. As Lenovo is a laggard in the online/open channel, and given the ongoing smartphone market commoditisation, we think Lenovo’s smartphone business is under more pressure than ever in China.”
Barron’s also notes that analyst Laura Chen of BNP is more bearish on PC sales than research firm IDC, which has forecast a 6 percent drop in PC sales this year. Chen sees a 10 percent drop, and even as Lenovo continues to expand its market share leadership – what are the real gains to be made in a declining market?
“As Lenovo’s PC market share is already high, we think any incremental share gain would be limited,” Barron’s quoted Chen as saying.
In servers, Lenovo faces a tough market in China with home-grown competition from Huawei.
Read the full Barron’s post at: http://blogs.barrons.com/asiastocks/2015/07/03/lenovo-pressured-on-all-fronts-bnp-downgrades-to-sell/
Check the links with this post for plenty of other Lenovo news and analysis from WTW.