Cash-strapped technology firm NEC has sold its entire stake in Lenovo as the Japanese firm contends with ongoing financial problems.
But Lenovo said the stake sale would not impact or harm the PC and tablet business coalition that the two companies embarked upon last January as part of efforts to push further into the lucrative Japanese market, despite the firm's shares dropping by more than 8 percent on Wednesday following the move.
Roderick Lappin, Lenovo's vice-president and executive chairman of joint venture Lenovo NEC Holdings, played down the share sale. Speaking to Reuters, he said:
In reality, NEC could sell those shares after two years anyway as per contract. All we have done is to let them do it 10 months earlier. This has no bearing on our joint venture.
It was rumored earlier this week that the financially-troubled firm would sell its entire stake to claw back cash, despite Lenovo's booming business and its expected shift to the top of the list of global PC builders.
Dow Jones Newswires reported yesterday that NEC would sell its 281.1 million shares it owns HK$6.30 (US$0.81) to HK$6.50 (US$0.83) per share.
NEC is struggling to keep its head above the water. In January the firm cut 10,000 jobs -- a tenth of its global workforce -- in a bid to cut costs amid difficult economic times and forecast losses in the following quarters.
Lenovo, however, remains the world's number two PC maker by sales, and is set to take the top-spot crown later this quarter following HP and Dell's decline in PC shipments quarter-on-quarter.
While the PC maker's joint venture with NEC will continue to focus on Japan, Lenovo continues to expand to other markets, particularly BRIC nations -- Brazil, Russia, India and China -- with the latter the driver of most of the firm's sales bar the United States.
Lenovo is "close" to breaking even its emerging market regions, though its Brazil base remains very much in the red due to high import taxes and a weak distribution model, according to Morgan Stanley.