Lenovo to Sell Phones in Markets Where IPhone Seen Costly

Lenovo Group Ltd., which has its headquarters in Beijing and Morrisville, North Carolina, rose 0.4 percent to HK$8.45 at the noon break in Hong Kong trading, before the announcement. The stock has climbed 20 percent this year, surpassing the 1 percent gain in the city’s benchmark Hang Seng Index.

Lenovo Group Ltd. (992), the largest maker of personal computers, said it will triple the number of markets in which it sells smartphones by focusing on emerging economies where Apple Inc. (AAPL)’s iPhone is seen as too costly.

“We have seen the first wave of success in Asian countries,” Chief Executive Officer Yang Yuanqing said in an interview yesterday. “We provide affordable products for emerging markets. That’s very important. For those markets, the iPhone is probably not the best-selling product, Lenovo can be much more competitive.”
Lenovo, in the next few quarters, will start selling smartphones in at least 20 new markets in the Middle East, Africa and Latin America, adding to the 10 where they are currently sold, Yang said. The global push comes after success in Indonesia, where Lenovo grabbed 13 percent market share in 12 months while achieving profit margins higher than in the home market of China, he said.
The company’s expanding global smartphone market share helped Lenovo report second-quarter profit that beat analysts’ estimates. Net income climbed 36 percent to $219.7 million in the three months ended September, Lenovo said yesterday. That surpassed the $202.7 million average of 17 analysts’ estimates compiled by Bloomberg.

‘Smartphone Shipments’

“Their smartphone shipments were better than they originally guided for,” Jun Zhang, an analyst with Wedge Partners Corp., wrote in an e-mail yesterday. “Gross margin and operating margin should improve as the smartphone business” expands, he said.
Second-quarter revenue rose 13 percent to $9.77 billion, exceeding the $9.41 billion average of 18 analysts’ estimates.
Lenovo, which has its headquarters in Beijing and Morrisville, North Carolina, fell 0.6 percent to HK$8.55 at 10:03 a.m. in Hong Kong trading. The stock has climbed 22 percent this year, surpassing the 0.4 percent gain in the city’s benchmark Hang Seng Index.
Expansion abroad may boost mobile devices to 50 percent of Lenovo sales within five years, from 20 percent now, Yang said.
While the company has plans to grow the business organically, it will also look at opportunities to expand through acquisitions, Yang said. He declined to comment on any specific targets, or whether the company had pursued BlackBerry Ltd. (BBRY)

‘It’s a Tool’

“We want to spend our shareholders’ money smartly,” Yang said in the interview. “Unless there is chance to give shareholders a good return, and we can get a good valuation for our shareholders, then I don’t think we should have an acquisition. Acquisition is not a purpose, it’s a tool.”
Lenovo hasn’t been told by any government that it couldn’t purchase assets because it’s a Chinese company, Chief Financial Officer Wong Wai Ming said on an earnings conference call yesterday. Wong was responding to a question about a report in The Globe and Mail that Lenovo had pursued a bid for BlackBerry until the Canadian Government said it wouldn’t accept a Chinese takeover of the company because of national security concerns.
Wong also declined to comment specifically on any interest the company may have had in bidding for BlackBerry.
Yang is expanding in mobile devices, competing with Apple and Samsung Electronics Co. (005930), amid a slump in global PC shipments. Lenovo posted the biggest gain in shipments among the world’s top-five PC vendors in the period as the industry experienced a 7.6 percent drop amid weak consumer sentiment for traditional computers, researcher IDC reported last month.

Rumors Clash With Reality as HTC Tries to Spell Out Its Future

 
It's been a busy few months for the Taiwanese smartphone maker.
Since Robert Downey Jr. was told to “Hold This Cat” back in August, HTC has gone on to have an historic quarter. That's not hyperbole, it really was historic.
In addition to the humdrum of unveiling, well, smartphones, HTC's also been toiling away at a few side projects.
Talks with Amazon.com about doing a handset for the online retailer's Prime members progressed during the period, with both sides staying mum on the project. The phone maker is also looking at doing a smartwatch, following on the heels of Samsung, Sony and Dick Tracy. HTC folks again chose to keep their lips sealed.
Somewhat less sealed was HTC's treasure chest of intellectual property and trade secrets. After complaints from the company, Taiwan authorities searched the offices and homes of some employees before detaining two R&D executives on the suspicion of leaking company secrets.
Low-key co-founder and Chairwoman Cher Wang came out of the shadows as well, doubling her days at the office and taking over more logistical work from CEO Peter Chou (who remains the boss, she said more than once). In an address to staff, she outlined customer service and consumer experience as an area the company needs to work on, while in an interview with Bloomberg Television, she said “HTC does have some problem of communication,” in terms of marketing its product design and technology.
Its PR situation didn't improve much either. Four months after HTC heralded her arrival, the “new” head of global PR, corporate and internal communications Lorain Wong quietly became the “ex” head of global PR, corporate and internal communications.
HTC's balance sheet does look set to improve after it unwound two of its biggest acquisitions of the past few years, selling off Saffron Digital and exiting from headphones maker Beats.
Meanwhile, Microsoft - the software company that got any kind of traction in mobile phones because HTC decided to devote much of its 16 years exclusively to their operating system - offered an olive branch (or perhaps a juicy carrot) soon after its long-awaited Nokia handset deal had other Windows handset makers annoyed. Microsoft basically said to HTC: How about you load Windows Phone on your Android handsets, and heck, we might even cut the license fee to zero (or very close to)?
None of that, though, is historic for HTC (although that last one is unusual for Microsoft), it's merely the ebb and flow of a modern tech company.
What's historic is that on Oct. 4, at a time and in a manner totally out of line with years of standard practice, HTC announced to the world its first loss on record.
We all know that losses happen in the corporate world. For some tech companies, losses seem to be the rule more than the exception.
To be fair, HTC still has more than $1.6 billion in cash (at the end of June) and minimal long-term debt, financial metrics that have been noticed by Jimmy Lai -- best known in Greater China as the founder of Next Media, and (not) known in the West as the man whose team created those Taiwanese Next Media Animation skits that have satirized the likes of Tiger Woods, Brett Favre and Justin Bieber. Lai, according to spokesman Mark Simon, has seen value in HTC's stock (down about 50 percent this year) and quietly built a stake of about 2 percent as a purely financial investment over the past few months. Lai isn't planning to get involved in management, says Simon, a fact that hasn't stopped speculation of how a Next Media-HTC tie-up might look.
In the smartphone business, though, history has shown that losses haven't tended to be followed by very happy tales. Motorola, Nokia and Blackberry are former handset titans whose earnings dipped below the waterline and have found, or are seeking, life preservers.
In the past few months, the rumors surrounding the future of HTC have poured forth. M&A seems to be the most likely escape route, with Lenovo and ZTE the names that get mentioned most. China Mobile, the world's largest mobile phone carrier, was also thrown into the mix as a possible suitor before HTC shot it down.
Another scenario posits that HTC could sell off its manufacturing operations to the likes of Foxconn (yes, that Foxconn) or Compal (which makes laptops and handsets), and outsource its manufacturing instead (note: Motorola, Nokia and BlackBerry were outsourcers long before they started posting losses).
M&A in Taiwan, however, is a giant hill to climb. Cross-border deals are rare and difficult to pull off, and hostile takeovers are unheard of.
Without the nod of Chairwoman Wang, who owns a significant minority, any deal is a non-starter.
And Wang is adamantly withholding any such nod. Speaking in the same Bloomberg Television interview, she argued that a visit to the “passionate” and “exuberant” employees of HTC would have you persuaded that “HTC should stand alone.”
So as this past quarter gets written up in the annals of HTC company history, today's investor conference call details the next quarter's financial outlook, and Downey prepares for the next installment of wacky TV commercials, it may just be that the words everyone wants to whisper when they hear the letters H-T-C is not Hot Tea Catapult or Humongous Tinfoil Catamaran, but something more germane

Twitter Ranks 5th in Engineer Pay Behind Google and Yahoo

 
Plenty of Twitter employees can look forward to becoming paper millionaires when the company goes public, but for now, engineers at Google and Yahoo! take home bigger paychecks on average.
Twitter ranks fifth in engineer pay with an average of $124,863 in annual salary, according to a study by job-search website Glassdoor. Stock-based compensation was not included in the study.
Juniper Networks, the second-biggest maker of computer-networking equipment, paid its engineers the highest salaries with an average of $159,990, the study said. Juniper was followed by LinkedIn, Yahoo! and Google on the list. The ranking includes companies where at least 50 software engineers had reported their salaries to Glassdoor between October 2012 and the end of last month.
Twitter, which has been growing its workforce ahead of an initial public offering, has said recruiting talented engineers is among the potential risks it could face in the future. The company added 300 employees in the third quarter, putting its total at 2,300.
The social-networking company is in the most competitive market for software engineers. They’re paid $111,885 on average in San Francisco, which is more than anywhere else in the U.S., according to Glassdoor. At the top of Twitter’s engineering team, Senior Vice President Christopher Fry made $10.3 million last year in total compensation including salary, stock and bonuses, the company said in its prospectus.
After its IPO, Twitter risks losing talent when longtime employees cash out their stock. But Twitter brainiacs itching to buy a new Tesla probably won’t find a better salary at Apple or Facebook. Apple ranked sixth, paying $233 less than Twitter on average, and Facebook ranked ninth, with $121,507, the study said.

How Alibaba Could Underprice Amazon, and Other Things You Should Know

If you're not yet familiar with Alibaba, get ready. China's largest e-commerce company will likely go public in 2014. Investment banks have given the company a valuation of as much as $120 billion, a market cap that would make it the third-biggest Internet company behind Google and Amazon.
That position may eventually put it in a spot hordes of companies pine for: a significant competitor to Amazon in the U.S. In addition, Alibaba recently led a $206 million investment in retail website ShopRunner, widening its presence in the country, and is moving toward a U.S. stock sale after talks with Hong Kong’s exchange broke down, a person familiar with the matter said last month.
Even so, few U.S. consumers are well-acquainted with Alibaba. Here are a few things you should know about the company.

It's Obsessed With Marketplaces

Alibaba's e-commerce properties lean heavily toward marketplaces, putting the company head-to-head with Amazon and EBay. Key ones include a set of English-language stores called Alibaba.com and AliExpress (where you can buy a really cute dress for $14.42). The former lets merchants exchange goods with each other, while the latter gives Chinese businesses a place to sell to a global audience. The models are similar to EBay's but more global, with buyers and sellers exchanging goods on the sites in more than 220 countries and regions.
In China, Alibaba has Tmall, a business-to-consumer marketplace, and Taobao, its consumer-to-consumer marketplace that competes with EBay. However, Taobao gets revenue from advertising rather than taking a commission from sellers.

It Could Beat Amazon on Pricing

As China's largest e-commerce company, Alibaba has ready access to its sellers' supply chain of cheap Chinese goods. As Martin Pyykkonen, an analyst at Wedge Partners, notes: "It's hard to find it cheaper than on Amazon. If Alibaba could come in and, at least for Chinese-made goods, offer a cheaper price, that's interesting. That might be their edge."
Ty Rogers, a spokesman for Amazon, declined to comment.

It's an Umbrella for About 25 Business Units

Alibaba's subsidiaries include eTao, its own shopping search engine; and Alibaba Cloud Computing, its data-centric cloud platform that compares with Amazon Web Services and Rackspace. It’s also affiliated with Alipay, a Chinese online payments service akin to PayPal.

It Has a Liberal Approach to Data

Alibaba calls its business units "repositories of massive amounts of market information and statistical data" -- and it wants to share. The company is working to be the first to make all of its market data available for free to its users, giving them the ability to create smarter strategies and move with ever-changing market conditions. That would be like Amazon sharing purchasing data with third-party sellers on its site.

It Wants to Live Long and Prosper

The company, founded in 1999, wants to "flourish" for at least 102 years, spanning three centuries. The goal is indicative of the company’s long-term approach to business, said John Spelich, a spokesman for Alibaba.

Microsoft Promotes ‘Phablets’ After Smartphone, Tablet Misfires

Microsoft Corp. unveiled Windows Phone software for smartphone-tablet hybrids as well as more powerful chips as the company plays catchup to Google Inc. and Apple Inc. in mobile devices.
A bigger start menu with higher-resolution displays will enable the software to run on phones with five- and six-inch screens for the first time, Microsoft said today in a blog post. The update to Windows Phone 8 will roll out to developers tomorrow and customers in the coming months.

After losing out in smartphones and tablets to Google’s Android operating system and Apple’s iOS software, Microsoft is trying to appeal to consumers in the middle. Global shipments of so-called phablets will more than double to 60.4 million this year, research firm IHS predicted in January. That’s a fraction of the more than 1 billion smartphones researcher IDC expects to be shipped.
Nokia Oyj, which is selling its handset unit to Microsoft for $7.2 billion, released a promotion for its Oct. 22 Nokia World event, featuring an image of a phablet. Microsoft, based in Redmond, Washington, is acquiring the business in a bid to jumpstart its phone efforts while also trying to lure other manufacturers to its mobile operating system.
Windows Phone’s 3.7 percent share of the smartphone operating system market in the second quarter compares with 79 percent for Android and 13 percent for iOS, according to IDC. Windows Phone is faring better in Europe and Latin America than in the U.S., Greg Sullivan, a director in the division, said in an interview.

Seeking Partners

Terry Myerson, head of Microsoft’s operating systems unit, tried to reignite HTC Corp.’s interest in Windows Phone last month, said people familiar with the discussions. He offered to cut or eliminate the license fee to make the software attractive as a second option on handsets with Android, said the people.
Chief Executive Officer Steve Ballmer and other executives met with handset makers during a trip to Beijing to try to line up new partners and shore up current agreements, said a person with knowledge of their trip.
As part of today’s announced update, Microsoft said Windows Phone will support Qualcomm Inc.’s Snapdragon 800 chip with four cores, a processor being used in some upcoming Android gadgets. Microsoft also added a feature called driving mode, which keeps users from texting or dialing while behind the wheel.

Tesla shows off Model X SUV at new Palo Alto showroom

If Hollywood movie makers were trying to create the quintessential Silicon Valley scene, they couldn't have done any better than the one Saturday afternoon in the 4100 block of El Camino Real.

Hundreds of people, nearly all of them snapping photos with iPhones, milled about at the opening of America's newest Tesla store, one mile from Stanford University and three miles from Google's campus. The sleek, white showroom gleamed. Flat screen monitors touted the benefits of the company's pricey and tech-hip all-electric vehicles. Music from a live DJ pulsed. And the valet parking was thick with visitors arriving in Tesla Model S sedans they already owned.
"It's awesome. It looks easy to drive, and it
looks so much better than a minivan. Minivans are for old people," said Vilma Estacio-Melamed, of San Jose, who admired a white Model X, Tesla's new SUV, which is scheduled to begin production next year.
 

The 27,000 square foot retail outlet, the vehicular equivalent of an Apple store, is the fifth Tesla location in the Bay Area, joining stores and service centers at Santana Row in San Jose, Fremont, Burlingame and San Rafael. Tesla now has 41 locations in North America.
"It's in the heart of Silicon Valley," said Telsa spokeswoman Alexis Georgeson. "The market is very strong for us in the Bay Area and Silicon Valley. We're opening stores in places where we expect to sell vehicles."
 
Founded in 2003, Palo Alto-based Tesla Motors has become a darling of high-tech set and environmentalists. From 2008 to 2012, the company sold 2,400 of its first vehicle, the Tesla Roadster, a two-seat electric sports car, with a base price of $109,000.
Its second car, the Model S, is a sedan that came out last year to rave reviews. The vehicle, which goes up to 265 miles on an electric charge and accelerates from 0 to 60 mph in 5.6 seconds, was named 2013 Car of the Year by Motor Trend magazine and received the highest score ever for a vehicle from Consumer Reports. The car has a base price of $69,900 to $79,900 before tax credits, depending on the battery pack.
 
"It's the first expensive car we've ever bought," said Christine Sireci, of Saratoga, who bought a dark blue Model S in March with her husband, Don, and visited the store Saturday. "I was driving a 2000 Chevy Astro. But I drove the Tesla and I fell in love with it."
Through June 30, Tesla sold 13,000 Model S cars and expects to sell 21,000 this year, Georgeson said.
Despite the huge buzz for the company -- whose CEO, Elon Musk, is a celebrity and whose stock price has jumped from $22 a share in January 2012 to $178 on Friday -- electric vehicles still represent less than 1 percent of American car sales. By comparison, General Motors sells 10 million vehicles a year.
 
There is also plenty of competition in the green motoring space. For much of the year, the top-selling car in California has been the Toyota Prius, which has sold more than 4 million worldwide since its launch in 1997. Larger carmakers, such as Nissan, with its all-electric Leaf, and Chevrolet, with its plug-in hybrid Volt, sell alternative vehicles for half to one third the cost of a Tesla.
And after a year of glowing press coverage, Tesla hit some bumps in the road when a video showing a Model S bursting into flames went viral earlier this month. The fire was the result of a driver near
freeway. As the stock dropped, Musk reassured the public that the fire was a freak occurrence and that the driver was not injured. A gasoline-powered car would have burned much worse in the same accident, he said.The company has so far received 6,000 orders for its Model X SUV, with customers putting down $5,000 for the standard version and $40,000 for the signature version, even though Tesla has not announced the price of the vehicle or exactly when it will begin delivery. Most deliveries are expected in 2015, and the base price is expected to range from $70,000 to $90,000.
That is a lot of money, said Estacio-Melamed, snapping a photo of the Model X on Saturday in the new Palo Alto showroom.
"But if it is better than all the other cars," she said, "maybe it's worth it."

Microsoft's phone update to feature driving mode

 

 Microsoft is updating its Windows software for cellphones to accommodate larger devices and make it easier for motorists to reduce distractions while driving.

It's the third update to Windows Phone 8 software since the system's release a year ago. Devices with this update will start appearing in the coming weeks, and older phones will be eligible for a free upgrade, too.
Something that may appeal to motorists: a new Driving Mode will automatically silence incoming calls and texts so that you can focus on the road. You also can configure the feature to automatically send out a reply to say that you're driving.
It can be activated automatically when the phone is linked wirelessly with a Bluetooth device in the car, such as a headset. Apple (AAPL) has a Do Not Disturb feature for iPhones, but that needs to be turned on manually.
What the Driving Mode won't do, however, is block outgoing calls or texts. And there will be ways to override it. The feature won't stop a teenager from texting while driving, but it will help reduce distractions for those who want that, says Greg Sullivan, director for Microsoft's Windows Phone business.
The new update also will allow for better resolution to accommodate larger phones. Currently, the system supports a maximum resolution of 1280 pixels by 768 pixels, which is adequate for phones with screens no larger than 5 inches on the diagonal. But video and image quality degrades when stretched out on larger phones, such as a 6.3-inch Android phone from Samsung.
The layout for larger phones also will change. Phones may now sport a third column of tiles, for instance. Contact lists and other features will be able to fit in more information. That's a contrast to Android, where text and images simply get bigger with larger screens, without actually fitting in more content.
Microsoft's Windows Phone software holds a distant third place behind Apple's iOS and Google's (GOOG) Android, with a worldwide market share of 3.7 percent in the second quarter, according to research firm IDC. But shipments of Windows Phone devices grew 78 percent to 8.7 million in the April-to-June period, compared with the same time a year ago. The tile-based layout in Windows Phone is the inspiration for the Windows 8 software powering tablets and personal computers.
There are a few ways Microsoft Corp. will catch up to the iPhone and Android phones with the new update.
For the first time, Windows phones will have a rotation lock function, so that the screen won't switch back and forth between horizontal and vertical mode while you're curled up in bed. There also will be a central way to close open apps. Before, you had to go into each open app and press and hold the back button.
And Microsoft is launching a program to give app developers early access to the new software. Apple has had a similar program for the iOS software behind iPhones and iPads, while Google often has worked with selected developers on unreleased features.