Lenovo and NEC to form Japan's largest personal computer business

By Mari Yamaguchi, The Associated Press

Lenovo Group Chief Executive Officer Yang Yuanqing, left, waves at photographers after shaking hands with NEC President Nobuhiro Endo during a joint press conference in Tokyo Thursday, Jan. 27, 2011. NEC and China's Lenovo said Thursday they will join forces to create the largest personal computer business in Japan. (AP Photo/Shizuo Kambayashi)

TOKYO - NEC and China's Lenovo said Thursday they will join forces to create the largest personal computer business in Japan and are exploring a possible tie-up in global PC sales.

Lenovo will own 51 per cent of the joint venture to be known as NEC Lenovo Group Japan. NEC Corp. will hold 49 per cent. As part of the deal, NEC will receive Lenovo shares worth $175 million.

The venture gives Lenovo a bigger presence in Japan while bringing NEC greater economies of scale and potential profitability for its struggling PC business.

NEC now has about a one-fifth share of Japan's PC market while Lenovo, the world's No. 4 PC maker, has about a 5 per cent share.

"It's crucial and very important for Lenovo's strategy to become the leading company in the PC industry," Lenovo CEO Yang Yuanqing told a joint news conference in Tokyo.

Lenovo has been expanding aggressively outside its home China market since acquiring IBM Corp.'s PC unit in 2005. Lenovo expanded into mobile Internet last year by launching its first smart phone and two Web-linked portable computers.

For NEC, whose PC business has been limited to the Japanese market, the venture could provide a bigger customer base to survive increased competition.

"Fast-growing Lenovo's partnership would boost our strength and would provide a new opportunity for our expansion in Japan and overseas," NEC President Nobuhiro Endo said.

The two companies, which will keep their separate brand names in Japan, have also agreed to explore further business co-operation in areas such as tablet devices and servers, while seeking a possible partnership in global PC sales, Endo said.

Hideyo Takasu, president of NEC Personal Products, will become president and CEO of the venture while Roderick Lappin, currently Lenovo Japan president, will serve as executive chairman.

"With the NEC partnership we will achieve a No. 1 market position in Japan and we are one step close to our ultimate goal" of leading the industry, said Lenovo's chief financial office Wong Wai Ming in a conference call with reporters.

Lenovo is the world's fourth-largest PC manufacturer behind Hewlett-Packard Co., Dell Inc. and Taiwan's Acer Inc. A combined Lenovo-NEC could rise to third place, though rankings are unclear until 2010 global sales figures are reported, Wong said.

Source :
From Mari Yamaguchi, The Associated Press, January 27, 2011 - 08:35 a.m. (http://www.canadianbusiness.com)