Lenovo Heads In New Direction, Floats To Raise Capital
Chinese PC Company Lenovo is set to raise cash to go in a new direction that includes cloud-based services.
In Australia the Lenovo business delivered $13.3M profit on a billion dollars turnover of which $7.2M came from Foreign Exchange gains.
The world’s #1 PC Company Lenovo is now set to list on the Shanghai board aiming to raise 10 billion yuan (A$2.1 billion) to develop new products in new categories that deliver higher profit return. The Company is already listed on the Hong Kong stock Exchange,
Lenovo, which makes the ThinkPad, commands the world’s largest share in the personal computer market.
The group is planning to leverage that strength to expand its services and solutions business.
During the quarter ended June, Lenovo increased research and development spending by 40% from a year earlier.
Lenovo “will spend twice as much each year over the next three years” on R&D, CEO Yang Yuanqing told Nikkei recently.
The company like their competitors is finding that profit margins in PC’s especially in the consumer market is “hard work” according to sources, with constant discounting of their consumer models at retail stores reducing profitability for the Chinese business.
With the new initiative Lenovo will float no more than 10% of the share capital.
The business will use Chinese depositary receipts in the STAR Market, the Shanghai Stock Exchange’s answer to Nasdaq to get the initiative off the ground.
The offering is part of a strategy to diversity funding sources, as Lenovo already trades on Hong Kong’s stock exchange.
Lenovo’s application, which was submitted and approved late last week said that roughly half of the 10 billion yuan will be used to develop new products and services.
Examples cited include cloud services, digital solutions for industry and development of artificial intelligence applications.
The money also will fund strategic investment projects, according to the filing.