UPDATED 07:46 EDT / FEBRUARY 27 2014

Lenovo vows to stem Motorola’s losses in just 18 months

lenovo_shop-300x186Lenovo chief Yang Yuanqing made an appearance at Mobile World Congress earlier this week, and took the opportunity to confidently predict that the company can transform its loss-making acquisition Motorola within just six quarters once it completes its takeover.

Yang made the bold claim whilst speaking to Bloomberg on the sidelines of MWC, insisting he would be able to wipe out Motorola’s $1 billion annual losses in next to no time – and all without needing to shed any jobs at the handset maker.

Yang said that Lenovo wasn’t scared by the $1 billion yearly losses Motorola had racked up since being acquired by Google back in 2011.

“We will improve that even from day one,” insisted Yang.

“Google is very good at software, ecosystems and services. But we are stronger in the manufacturing of devices.”

Yang said that on the contrary to what many believe, Motorola’s gross margins are still “pretty decent,” and should improve as the company starts selling its handsets in newer, emerging markets. Lenovo also has a plan in place to cut operating costs from Motorola’s blandly named “internal communications and computing services”, said Bloomberg.

Of course, this will only happen if the deal actually gets the go ahead. Lenovo’s acquisition of Motorola has yet to be given the go-ahead by US regulators, and neither has its deal to takeover IBM’s x86 server division – another critical element of the company’s long-term plans. Yang told Bloomberg that the company is taking no chances with either deal, and to that end, Lenovo has hired the assistance of several well known Washington lobbyists to ensure that the acquisitions are approved by the powerful Committee on Foreign Investment in the US (CFIUS).

Supposing the deals do go ahead, it’ll be interesting to see if Yang and Lenovo can stay true to their words. The company is renowned for the way it turned around IBM’s ailing PC business and has since gone on to become the world’s largest PC manufacturer, but many people forget that it took Lenovo several years to achieve this feat. What it’s proposing now is a much faster turnaround than it’s ever achieved before, and that could take some doing.

No doubt Yang is gambling that Lenovo can draw on its experience with IBM’s PCs in the mid-2000s, as well as its own successful smartphone business (in China anyway) to do even better this time around and put Motorola back in the black within the next 18 months.


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