Lenovo Backs Away From RIM Rumors, Says It's Exploring Options
Lenovo officials are backpedaling from reports that they are considering acquiring a part or all of BlackBerry maker Research In Motion.
Lenovo Chief Financial Officer Wong Wai Ming, speaking with Bloomberg at the World Economic Forum in Davos, Switzerland, last week, offered an answer he apparently intended to be a rote, nonanswer, but which Bloomberg took as an actual one.
"We are looking at all opportunities—RIM and many others," Wong said, according to Bloomberg.
"We are aware that Lenovo's CFO [Wong Wai Ming] was speaking broadly about M&A [mergers and acquisitions] strategy in a recent interview. RIM was raised as a potential target by the journalist, and Mr. Wong repeatedly answered in a manner consistent with all of our previous statements on M&A," Lenovo responded in a prepared statement, reported by The Next Web.
What Wong said—consistent with the company's message, Lenovo continued in its statement—was, "Lenovo is very focused on growing its business, both organically and through M&A. When inorganic ideas arise, we explore them to see if there is a strategic fit."
Should Lenovo go ahead and decide to explore RIM, it may well find it a strategic fit.
Lenovo has $3.6 billion in cash, and in a PC market hit hard by consumers' affections for tablets, Lenovo is the only top-four PC maker that has managed to continue to grow. During the fourth quarter of 2012, it posted 8 percent year-over-year growth, while Hewlett-Packard, Dell and Acer posted losses of 0.5 percent, 21 percent and 11 percent, respectively, according to Gartner.
In China, Lenovo also has a leading smartphone brand and successfully sells tablets, and has begun testing interest for these products elsewhere. In the United States, it has shown off an Android-running tablet, in addition to Windows 8 models, and earlier this month, it launched six new smartphones, a mix of consumer and business-geared handsets. Lenovo has said it will launch the phones in China before bringing them to "select global markets."
A particular possibility for the U.S. market is the K900, which features a 5.5-inch 1080p high-definition display and measures 6.9mm deep. (By comparison, the Apple iPhone 5 is 7.6mm deep.)
BlackBerry maker RIM has made clear that it's open to the ideas of selling off its hardware business, licensing its software or striking any deal in between that would best benefit its shareholders.
Responding to the Bloomberg report, RIM also issued a statement in which it said that, as RIM CEO Thorsten Heins made clear during RIM's Dec. 20 earnings call, RIM will "continue to examine all available options to 'create new opportunities, focusing on areas where we will be more effective partnering rather than going it alone, and ultimately maximizing value for all stakeholders.'"
While RIM has hemorrhaged market share over the last few years, Heins, in a January interview with German newspaper Die Welt, pointed out that RIM is debt-free and has $2.9 billion in available cash—that it's not completely desperate yet.
Heins has also repeated—in Die Welt, as well as to eWEEK—that while RIM is investigating all options, it has no interest in moving on them until it launches its long-delayed BlackBerry 10 platform and smartphones and assesses the world's response.
RIM plans to unveil BlackBerry 10 at a New York City event Jan. 30, and will soon after begin selling the phones. Heins has promised to include carrier launch information in RIM's Jan. 30 announcements.
A potential obstacle to a Lenovo purchase of RIM could be the fact that while Lenovo is quick to present itself as a global company—its principal operations are in North Carolina, Singapore and Beijing—its roots are in China. While any company looking to buy RIM, whose products are used by U.S. government agencies and other regulated industries around the world, will be thoroughly investigated, a Chinese company controlling RIM would present particular security frictions.
Chinese telecom equipment makers Huawei and ZTE—which have ties to China's government—have been investigated and criticized by U.S. lawmakers, who have warned that each presents possible "national security dangers."
Canadian Industry Minister Christian Paradis said he'd prefer that RIM grow "organically," Bloomberg reported, adding that the Canadian government reviews all foreign takeovers of companies valued at more than $344 million.
Michael Genovese, an analyst with investment firm MKM partners, told Bloomberg that the terms of a Lenovo purchase could help to appease lawmakers.
"If the key intellectual property and software is being kept in Canada," said Genovese, "I think the government would sign off on a deal for just the hardware."