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Lenovo says it can fix Motorola within a year


News by Andrew Kameka on Thursday February 13, 2014.

industry news · andrew kameka

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Google owned Motorola for two years before deciding to sell the company to Lenovo after billions in loses. When Lenovo takes ownership pending regulator approval, CEO Yang Yuanqing says his company will be hurt by Motorola's poor performance but can see a turnaround happening in a less than a year. As Lenovo announced a $265.3 net profit for the most recent quarter, Yang said that purchasing Motorola and IBM's server division would have a short-term negative impact on the company, but he estimates that Motorola could be profitable in three to five quarters (9 to 15 months).

Lenovo doesn't officially take over Motorola until regulators approve the deal and it becomes official, but Yang has provided a broad outline for how to improve Motorola. Like it did with Thinkpad computers, Lenovo plans to cut costs for production and use its own supply chain to make Motorola earn more money. That means "lower material costs," according to Reuters. It might also mean layoffs of Motorola's 3,500 employees. Lenovo says it has no plans to have layoffs, but there will be incentive to reduce head count if it plans to return to profitability that quickly.

Lenovo also plans to use Motorola as an entryway into markets in the west and reintroduce the brand into its home market of China. The company is banking on its Thinkpad strategy being as successful in mobile as it was in the PC industry. Lenovo is currently the fourth biggest global producer of smartphones.

source: Lenovo

 
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Andrew Kameka
Andrew is MobileBurn.com's managing editor. He is based in Miami, Florida.

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