Lenovo Group Ltd., which is buying Motorola Mobility from Google Inc., plans to make the phonemaker profitable within four to six quarters without eliminating jobs, Chief Executive Officer Yang Yuanqing said, according to Bloomberg.
“Don’t be scared by the $1 billion-a-year loss,” Yang, 49, said in an interview at the Mobile World Congress in Barcelona. “We will improve that even from day one. Google is very good at software, ecosystems and services. But we are stronger in the manufacturing of devices.”
Yang has bet he can use the purchases of Motorola and International Business Machines Corp. (IBM)’s low-end server business, for a total of $5 billion, to move beyond the shrinking personal-computer market to become a broader technology company. The acquisitions, both of which are larger than any Yang has previously completed, will challenge his ability to absorb the new teams and find the cost savings to make the units profitable.
Motorola Mobility had operating losses of more than $1 billion last year, according to data compiled by Bloomberg. The timetable to turn around Motorola begins after the acquisition is completed, and Yang said he’s optimistic Lenovo will receive regulatory approval.
Improved profitability will come from increased production and sales as the company targets emerging markets, Yang said. The company also will seek to reduce costs from internal communication and computing services. Motorola’s gross margins are “pretty decent,” he said.
The Motorola acquisition will create the world’s third-largest smartphone vendor with about 6 percent of the global market, trailing only Samsung Electronics Co. and Apple Inc., according to Strategy Analytics.