Lenovo already has a stronghold on the phone business in China, where it specializes in entry-level handsets. So when the Chinese company shelled out $2.9 billion to buy Motorola Mobility we assumed its goal was to make a push in the U.S. market. That may be true, but in order to help Motorola make a profit, Lenovo says the best strategy is to sell its Moto phones in China as well.
Lenovo Group Ltd. (992), which posted a 29 percent surge in profit today, expects to end losses at Motorola Mobility within quarters of completing a deal as it reintroduces the smartphone brand to China. “In a few quarters we can turn around the business,” Chief Executive Officer Yang Yuanqing said in a phone interview today. The Beijing-based company has spoken to U.S. regulators and is working to get approval to buy Motorola from Google Inc. (GOOG) for $2.91 billion in cash and stock. Yang led more than $5 billion of deals last month to help withstand shrinking demand for personal computers, a market that accounts for about 80 percent of Lenovo’s sales. In addition to the Motorola acquisition to boost smartphones, the company agreed to buy International Business Machines Corp. (IBM)’s low-end server unit for $2.3 billion to add corporate customers.