November 2, 2017
By Sijia Jiang
HONG KONG (Reuters) – Lenovo Group <0992.HK> said it had reached an agreement to buy a 51 percent stake in Fujitsu’s <6702.T> personal computer unit for up to $269 million, after earlier posting a lower quarterly profit on continued difficulty in the global PC market.
Shares of the Chinese PC maker rose as much as 5 percent as traders came back after the midday break. Lenovo and Fujitsu had first announced in October 2016 that they were exploring cooperations in their PC business.
Lenovo said it would pay for the stake in Fujitsu Client Computing Ltd with 17.85 billion yen ($156.70 million) in cash and 2.55 billion-12.75 billion yen based on performance to 2020.
Earlier in the day, Lenovo reported a profit of $139 million for the second quarter ended September, versus $157 million a year ago. A taxation gain of $118 million helped earnings beat an average analysts’ estimate of $44 million.
Lenovo’s revenue was $11.8 billion, compared with $11.2 billion last year and a consensus estimate of $11.3 billion.
Lenovo’s global PC unit shipments rebounded 17 percent from the previous quarter, though its PC market share in the six months dropped 0.2 percentage point to 21 percent, Lenovo said, without revealing shipment numbers.
PC makers around the world are struggling as consumers switch to mobile devices. Data from Gartner shows that worldwide shipment of personal computers fell 3.6 percent from a year ago in the third quarter of 2017, the 12th such decline in a row.
Lenovo lost its title as the world’s largest PC maker to HP Inc
Lenovo’s struggling mobile business group, which it is looking to turnaround in the second half of this fiscal year, reported a narrower operating loss before taxation of $261 million for the interim period.
Loss at its data center business widened to $214 million.
Lenovo warned market conditions would remain challenging in the short term, but said the agreement with Fujitsu would help it enhance its business globally.
Lenovo shares were up 2.84 percent at 0550 GMT, outstripping the broader market <.HSI> that was down 0.2 percent.
(Reporting by Sijia Jiang; Editing by Himani Sarkar)