MORRISVILLE – Lenovo is getting a double dose of bad news today.
In Hong Kong, the “blue chip” top stock index known as the Hang Seng has dropped Lenovo’s stock as the global tech giant’s share value continues to decline.
“The Hang Seng Indexes Company said it has decided to remove Lenovo from the blue-chip index after reviewing the Hang Seng Family of Indexes for the quarter ended March 30 this year,” Reuters reported.
Also, a research firm says that growing concerns about trade wars between China and the US could impact Lenovo’s PC notebook sales.
In a statement issued in reaction to the Hang Seng news, Lenovo said the company was making “solid progress.”
“Lenovo is making solid progress on executing its 3-wave strategy,” the company said, citing the term given to Chairman and CEO Yang Yuanqing’s plan to boost its performance.
“While we respect the review results of Hang Seng Indexes, we are singularly focused on our ongoing transformation to drive sustainable long-term returns for our shareholders.”
The Hang Seng issued a statement saying that Lenovo would be dropped as of June 4. Lenovo joined the list – similar to the Dow Jones – in 2013.
But since that time, burdened by lagging smartphone sales, a server unit that has gone through reorganizations and leadership changes, and sluggish PC sales that saw Lenovo lose the No. 1 spot to HP, Lenovo share value has dropped 57 percent.
Bloomberg news calculates the lost value at $5.9 billion.
The news service recently declared Lenovo “the world’s worst tech stock.”
“Removal from the gauge could spur more outflows from Lenovo, as at least $107 billion worth of passive funds track the Hang Seng Index, data compiled by Bloomberg show,” reported Jeanny Yu.
Yuanqing has remained positive, however.
In Raleigh recently to meet with some 1,000 employees, Yang insisted the worst was over for the company. The pep talk was part of Lenovo’s annual global tour to meet with its workers as part of what the company calls “kickoff” events. He continued his positive tone in later stops in Europe and in China.
“We have passed Lenovo’s most difficult period,” Yang told the Raleigh crowd.
Looking ahead, Lenovo must like a “beast” that has been starved, so that “we can pounce and make gains,” Yang added.
Meanwhile, Taiwan-based Digitimes Research warns in a new report that “trade spats” between the US and China could hit Lenovo.
The company operates twin headquarters – one in Beijing, the other in Morrisville – but much of its gear is made in China.
“Affected by the ongoing trade spats between China and the US, Lenovo may lose the opportunity to bid for American government procurement projects, with tender projects from enterprises also likely to be impacted,” the research firm said.
Lenovo’s sales are already hurting in the US.
Digitimes also warned that global notebook shipments could decline as much as 5 percent in the current quarter. However, HP is expected to grow sales.