Lenovo trader, how does Motorola turn a profit?

October 30, Lenovo announced the formal completion of the acquisition of Motorola from Google, this time from January 30 announced the acquisition of the last 9 months.

For Motorola mergers and acquisitions, Lenovo Group chairman and chief Executive Officer Yang set two junlingzhuang: First, Motorola will be in 4 to 6 quarters after the profit, and the second is not layoffs. In the fierce competition in the mobile phone market, without layoffs in the case of profit, Lenovo what is the secret weapon?

"Why not lay off the staff?" 】

Throughout the history of mergers and acquisitions, layoffs are a lingering problem. After Microsoft's takeover of Nokia's mobile phone division, the company announced plans for a 18,000-person layoff, of which 12,500 were from the Nokia Equipment and Services unit it acquired. After Google's acquisition of Motorola, it also launched a layoff plan to cut Motorola's 30,000 employees to only about 3500 people.

This can be understood, mergers and acquisitions will inevitably appear a large number of overlapping positions, the need for layoffs. In addition, mergers and acquisitions need to spend a lot of money, after the merger of enterprises in order to quickly achieve profitability, through layoffs to reduce labor costs to become a shortcut to profitability. These are the reasons why mergers and acquisitions are always accompanied by layoffs.

So why is Lenovo able to do without layoffs? After announcing the acquisition on January 30, Yang explained why he did not lay off workers: "The company's plan is to make the most of the" baby "by reducing the number of people who have been cut from their initial 30,000 employees to more than 3,000 now. "Indeed, Lenovo's acquisition of Motorola is an important reason to fancy its talent, and after Google's job cuts filtered after the rest of the real talent."

More importantly, Lenovo's strength to turn around without layoffs is due to Motorola's strong performance in the last two quarters. This suggests that aggressive development can revive the Jedi.

"Motorola Jedi Recovery"

Motorola slipped into its lowest point last year, but from the end of last year Motorola, with the help of the Jedi, began a strong recovery.

Driven by India and the UK market, Motorola phones have reached 6.5 million global shipments in the first quarter of this year, one of the best quarterly results in nearly two years, starting to pick up. The biggest contributor to the growth is Motorola's cost-effective product Moto G, which has swept the multinational market with low prices and a good experience, and has even become Europe's best-selling single item in January.

Motorola was more prominent in the two quarter, with 8.6 million smartphones globally sold, up 130% from a year earlier. Nick Spencer, senior analyst at ABI New, even exclaimed: "I didn't expect Motorola to rebound in an effective way, but it did." ”

Motorola's recovery, the main reasons are two: first, the breakthrough in innovative products, the high price of Moto G and Moto E smartphone to achieve strong sales; second, the new market opened up, Motorola's business scope from last year's 10 countries to expand to nearly 50 countries. For example, in the short time since August last year, Motorola's share of smartphone sales in the UK rose from "almost negligible" to 6%, and was welcomed in markets such as India and Brazil.

Motorola after being acquired by Google, on the one hand, the streamlining of most of the people, to get rid of the ills of bloated and sluggish, become a more focused, more flexible company, on the other hand benefited from Google's restructuring, in product innovation and so made great progress, this is the core of Motorola can recover.

"Where is the secret of the profit?" 】

While Motorola is on the road to recovery, the challenge of turning around is still very big. According to Google's third quarter of 2014 earnings, Motorola Mobile when revenue received 1.718 billion U.S. dollars, a loss of 185 million U.S. dollars. Motorola Mobile has lost up to $2.8 billion trillion since the company completed its Motorola Mobile takeover deal. What is Lenovo's secret to turning Motorola around without layoffs?

According to Lenovo Group vice president, MBG China Mobile phone business general manager Zhang Hui Introduction, Lenovo will maintain a dual brand strategy in the future, and set up a wholly-owned subsidiary "Motorola Mobile Ltd.", its headquarters will continue to be located in Chicago, United States. Independent operation, development and product definition. In North America, Western Europe, Japan, Australia and other mature markets, Lenovo will be the main push Moto brand. In Southeast Asia, India and other emerging markets, the flagship Lenovo brand, covering the midrange and entry level products. And in mainland China and other markets. Will implement the double brand strategy, Lenovo covers the low-end product line; Moto Brand covers high-end products.

Profit is nothing more than open source and throttling two big tricks. In open source, Lenovo's dual brand strategy is helpful to realize the synergy between Lenovo Brand and Moto Brand, and to achieve complementary effects in product positioning and market development. If Motorola will use Lenovo's channels to strengthen its position in emerging markets such as China and Asia-Pacific, Lenovo has not only acquired Motorola's research and innovation capabilities and more than 2000 patents, but also acquired Motorola's global carrier resources and developed regional markets.

In the throttling, Motorola is expected to benefit from Lenovo's strong power in the supply chain, Lenovo's own manufacturing capacity and global resource allocation will be able to form synergies with Motorola, in procurement, channels and operations and many other aspects of cost reduction, improve efficiency, thereby improving financial returns. At present, Motorola's gross profit margin of 23%-25%, and Lenovo's gross margin of about 10%, which means that if Lenovo took the idea of the phone to operate a disk Motorola, can significantly reduce costs.

Cutting costs to make a profit by laying off workers is a short cut, but it cannot bring about a real healthy development. Only truly achieve synergy, take the aggressive development line is the correct way to turn the real profit.