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.