Lenovo snaps up majority stake in Fujitsu PC business

The company also managed to beat analyst expectations in Q2 2017.
Written by Charlie Osborne, Contributing Writer

Lenovo has reached an agreement to purchase a 51 percent stake in Fujitsu's PC unit in a deal worth up to $269 million.

Lenovo said in a statement on Thursday, alongside the company's Q2 2017 earnings report, that the deal has been made possible through a partnership with the Development Bank of Japan (DBJ).

As part of the agreement, Fujitsu has agreed to sell a 51 percent stake in the PC unit to the Chinese tech giant, as well as a five percent stake to DBJ.

Lenovo and DBJ say the joint venture will focus "on the research, development, design, manufacturing, and sales of Client Computing Devices (CCD) for the global PC market."

Lenovo will pay 17.85 billion yen (roughly $156.7 million), but depending on Fujitsu's future performance, this may increase to up to $269 million. DBJ plans to contribute 2.5 billion yen.

The deal is expected to close in Q1 2018, and the resulting three-company venture will keep trading under the Fujitsu brand.

Lenovo hopes that by combining Fujitsu's global network and Lenovo's established presence in different markets, the PC unit will see increased growth, scale, and improved competitiveness.

In addition, Lenovo has reported a mixed bag of Q2 2017 results. (statement)

Revenue was $11.8 billion, a five percent increase year-over-year from $11.2 billion, and an 18 percent increase over the Q1 2017, surpassing analyst predictions of $11.3 billion.

Profits were reported at $139 million for the second fiscal quarter, or $1.26 earnings per share, in comparison to $157 million in Q2 2016.

Pre-tax income grew by $104 million, which helped beat analyst expectations of $44 million, as reported by Reuters.

Lenovo said that the PC and Smart Devices (PCSD) group's revenue increased by seven percent, up 20 percent quarter-to-quarter to $8.4 billion.

PC shipments were recorded at 14.5 million units, rebounding 17 percent from Q1 2017, although Lenovo's overall market share has dropped in the past six months by 0.2 points to 21 percent.

Tablet shipments increased by 8.9 percent year-over-year to 2.97 million units.

The company shipped 15.3 million smartphones worldwide in Q2 2017, with improved shipment rates recorded in Western Europe, Latin America, and the US.

Lenovo's business has grown 14 percent year-over-year in emerging markets, including India.

"In the last quarter we continued to make progress in transforming our business by executing our three-wave strategy," said Yang Yuanqing, Lenovo Chairman and CEO. "The combination of strong execution and building solid foundations continue to be Lenovo's strength. [...] We will continue to invest in building foundation and core competence for the two new growth engines, which will bring stable and sustainable returns."

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