Bloomberg News

Lenovo Rises to Two-Week High on Brazil Expansion Plans

September 04, 2012

Lenovo Group Ltd. (992) rose to the highest in two weeks in Hong Kong trading after the world’s second-largest computer maker said its chief executive officer will announce plans for expansion in Brazil tomorrow.

Lenovo rose 1.2 percent to close at HK$6.62, the highest level since Aug. 21. Earlier it gained as much as 5.2 percent.

Chief Executive Officer Yang Yuanqing will make the “biggest announcement in the company’s history in Brazil” tomorrow, Lenovo said in a statement. The company didn’t immediately supply additional information.

Lenovo is looking for sales to first-time computer buyers in emerging markets such as Brazil and India to continue driving growth that’s faster than the industry average as the company closes in on Yang’s goal of passing market leader Hewlett- Packard Co. (HPQ:US) in global shipments. Yang in an Aug. 31 interview had said he would consider acquisitions to build competence in areas where the company is weak.

The company on July 5 announced plans to invest $30 million to build a computer factory and a distribution center in Itu, in the Brazilian state of São Paulo. That unit will have as many as 700 employees in two years, when it’s expected to reach maximum capacity, Lenovo said at that time.

Lenovo will also “fully leverage” the tool of acquisitions if a target “is consistent with our strategy,” Yang said in an Aug. 31 interview in Beijing.

Shares Surge

The company’s shares have gained 28 percent in Hong Kong this year, compared with a 5.4 percent advance in the city’s benchmark Hang Seng Index.

Lenovo on Aug. 16 posted a 30 percent increase in fiscal first-quarter profit as it expanded market share globally. Net income climbed to $141.4 million in the three months ended June 30, from $108.8 million a year earlier. That beat the $133.5 million average of eight analysts’ estimates compiled by Bloomberg.

Sales in the company’s Asia-Pacific and Latin America division that includes Brazil increased 72 percent to $1.72 billion during the period, the company said at the time.

Lenovo increased shipments of computers including Thinkpad laptops by almost 15 percent in the second quarter, even as industry levels fell 0.1 percent, Stamford, Connecticut-based Gartner Inc. said July 11. That increased its market share by two percentage points to 14.7 percent in the second quarter, almost matching Hewlett-Packard’s 14.9 percent, Gartner said.

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net; Helder Marinho in Sao Paulo at hmarinho@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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