NEC offloads stake in Lenovo for $230m
05 September 2012
Japanese electronics group NEC has sold its entire stake in PC manufacturer Lenovo Group for $230m.
NEC acquired 281 million shares in the Chinese computer maker last year in exchange for a 51% stake in a joint venture, NEC Lenovo Japan, which combined the two companies’ PC efforts in the market.
As part of the joint venture, NEC was required to hold on to the shares for a minimum of two years following the close of the deal, but the struggling electronics giant requested permission to be released from this early.
Lenovo’s share price has increased by approximately 40% since the joint venture deal was originally struck in January 2011. NEC has earned a profit of $51m on the back of the valuation gain.
Lenovo has stated that NEC selling its stake in the company will not affect the operations of NEC Lenovo Japan in any way.
NEC posted a net loss of $1.4bn in its 2011 fiscal year ending in March 2012. Although it has forecast a $255m profit for 2012, its personal services division, which includes its share of the PC business, is still expected to make a loss. The company also argues that its smartphone business has been “negatively impacted by foreign vendors” and that flooding in Thailand has severely affected its operations.
In contrast, Lenovo is snapping at HP’s heels to become the world’s largest manufacturer of PCs by market share. In its 2011 annual financial report, it posted a net income of $473m.
Lenovo is one of the 19 Chinese technology firms that recently formed an alliance to develop a rival to Apple’s Siri voice recognition feature. The group intends to create a piece of voice recognition software that operates more effectively with Chinese languages.
David Hing, London