Investors are worried about Lenovo's 2, Yang intends to win by cost control

Lenovo, a company with a net cash reserve of 3.4 billion dollars, unexpectedly engaged in a business merger with IBM X86 servers and Motorola smartphones within a quarter. The capital markets have expressed some concern about Lenovo's moves, as if the history of Lenovo's successful acquisition of IBM's PC business has not been entirely reassuring to investors. The recent stock price of Lenovo Group is a good proof.

How to reassure investors and the industry? Yesterday, Yang in Lenovo Group third quarter of the Conference, the Lenovo Group's future strategy was interpreted, the first systematic interpretation of Lenovo Group for the integration of Motorola business plans.

Why are investors worried?

Yang believes that investors are worried in two aspects, one is that Motorola's business is now a relatively large loss of business. Even if Lenovo can turn a profit, it will have a negative impact on Lenovo's performance in the short term. This is one of the reasons that has affected Lenovo's recent share price.

In addition, it is outside of Lenovo integration and operational capacity of doubt. Although Lenovo has a wealth of experience in mergers and acquisitions, the acquisition of Motorola's ability to resolutely put past strategies in place is another point investors are worried about.

According to the Yang timetable, Lenovo is expected to lead Motorola to a profitable track in a few quarters, up to six quarters. Meanwhile, he is also communicating with investors to strengthen investor and shareholder confidence.

Lenovo's idea of the trader

Using the huge shipments of Lenovo and Motorola handsets, Lenovo expects a synergistic effect on the procurement of raw materials to reduce costs. This is a large system involving the supply chain, including production, manufacturing and transportation, which helps to reduce costs.

From both sides of the current business, Motorola's gross profit margin between 23% to 25%, and Lenovo's gross margin of about 10%, which means that if Lenovo took the idea of the mobile phone to operate Motorola, can reduce costs and achieve better profitability.

Yang stressed that Lenovo will not consider the way to reduce layoffs to achieve cost control. At this stage, Motorola's employees have been reduced from more than 30,000 people to 3500 people, who are mainly research and development staff, so Lenovo will not go to layoffs.

Products, Lenovo will consider expanding Motorola's product line. At this stage, Motorola's products are not rich enough, relatively thin, Lenovo plans to make Motorola brand to cover from high to low prices of various segments.

On the market side, Lenovo plans to reintroduce Motorola's branded products to China and other developing countries. By borrowing Lenovo's marketing capabilities and channels in China's emerging markets, Motorola is making more of a profit in China.

On the target side, Lenovo plans to achieve 100 million sales plan in 2015. Throughout 2013, Lenovo mobile phone shipments in about 50 million units.

The impact of mergers and acquisitions

One of the focuses of Lenovo's PC strategy is to make a breakthrough in the smartphone business. Yang believes that Lenovo's foray into the European and American smartphone market is the bottleneck of intellectual property and brand, Motorola brand to help Lenovo get access to the above market visa.

In the domestic market, the merger will also have an impact on Lenovo's China market, similar to the PC era Thinkpad+lenovo dual brand strategy will be in the smartphone business, Lenovo will launch a "Motorola+lenovo" dual-brand strategy.