Lenovo's share price plunged 15%: News of Sony's PC joint crackdown

Tencent Science and Technology long song February 4 compiled due to a report last weekend that Lenovo's plans to buy a Vaio PC business in a loss by joint ventures, Lenovo's shares plunged about 15% in Tuesday. Before the news, Lenovo had been spending 5.2 billion of dollars on acquisitions of IBM server business and Motorola Mobility, some of which were paid in shares. The moves have not only worried investors, but analysts have cut the company's expectations. Lenovo, the world's biggest PC maker, is trying to expand its smartphone business to offset the weakness of PC demand. The company hopes to challenge Samsung Electronics and Apple in the smartphone market through recent deals. But many in the industry are concerned that these acquisitions are hard to see in the short term. "The Motorola Mobile takeover is the right move, but it will have a negative impact on profitability for years," Jefferies &co, US investment bank, said in a study. The market is overly optimistic about the acquisition of IBM x86 servers. "The company's market capitalisation has evaporated nearly 3.7 billion dollars in 5 trading days since Lenovo announced a 2.3 billion dollar takeover of IBM's low-end server business." Lenovo's share price plunged 14.5% per cent on HKEx today, its biggest single-day decline since the January 8, 2009 plunge of 26%. Sony once said that Lenovo and its joint venture report is not true, but the company also admitted that it is indeed looking for a variety of Vaio. Sony will unveil its latest performance in Thursday, which has been struggling in the PC and consumer electronics markets. The loss of the PC and television business has also become the main reason why Moody's downgraded Sony's debt to junk levels last week. Lenovo has not immediately responded to a joint venture with Sony.