Category: Money tips Release Date: 2006-03-05
Lenovo's net profit is less than 1.8%. However, we believe that if a business model less than 5% net profit, it is not a good business model, is the need to change the business model.
"Now back to Beijing is home to New York is home." Yang told reporters said with a smile. In fact, if not the release in Hong Kong Lenovo (0992.HK) performance, Yang has no chance to return to Beijing. Three days in Beijing, only to go home spent 6 hours, Yang more time to soak in Lenovo's Beijing R & D centers, together with the CEO Ward to discuss the further development of the new Lenovo.
Yang told reporters, Lenovo integrate smoothly, and will be completed ahead of the first phase of integration, which was marked by the successful integration of Lenovo's first quarter of fiscal 2005 (April 1-June 30) earnings --- This is the association M IBMPC the first time after the original IBMPC business into a listed company (only incorporated into the May 1 to June 30 performance).
Yang expressed satisfaction with the performance this quarter, because the first 60 days post-merger integration is the most difficult period, but in these 60 days, the new Lenovo Group, the original IBMPC to achieve profitability. In addition to a substantial increase turnover and net profit, the Lenovo's operating cash flow reached 4.3 billion Hong Kong dollars, net of cash saved as 5.9 billion Hong Kong dollars, while the cash flow turnaround time is 10 days from the original even down to negative 35 days now, negative 35 days should be the PC industry, one of the highest level, with the same Dell.
On Yang interviewed on the day --- August 12, Dell released annual report, its profit more than 1 billion U.S. dollars, net profit margin as high as 8.2%. Compared with Dell, Lenovo's net profit on the low side. But Yang did not think this is a bad thing: "rivals the profits so high, that I have up space; only if we are on the opponents will be down."
Integration will be completed ahead of schedule "21st Century": and other Chinese companies to implement cross-border mergers and acquisitions compared to Lenovo in the shortest time to achieve profitability, the reasons for that?
Yang: There are many reasons, such as IBM had a very good customer base, brand foundation is very good, but also with the Lenovo team execution. But more importantly, the original negotiations on Lenovo has done a lot more detailed work, such work include an analysis of it is worthwhile to buy, buy how to run after. Purchased after verification, we will find that most of the assumptions are established. On the other hand of course, is negotiating the terms better.
"21st Century": What stage is currently associate into it? Yang: So far, Lenovo has done a two areas: the first three months of steady customers, is the business three months after the integration. Lenovo's integration is phased, so far only the first stage, only the first phase of integration of the headquarters of Lenovo functional departments, namely Finance, human resources, legal affairs and other communication sectors, the original Lenovo China and Lenovo International's business has not yet integrated together. The next step is definitely the supply chain together to integrate business units and business units into the future is the integration of product lines.
"21st Century": So far, the successful integration do? Yang: Because we have designed it very clearly, so progress has been very well. Lenovo's integrated second step could have been implemented a year later, but now will definitely ahead of schedule. The two operations into one integrated business, two teams turned into a complete team, it seems simply impossible for one year.
"21st Century": That is when complete? Originally planned 18 months to complete.
Yang: Yes, certainly not 18 months, if all goes well, will be completed this year, that is, six months ahead of schedule. In fact, the completion of the procurement has been integrated, and other supply chain integration is in progress. Why is procurement preference, because the most likely to purchase a synergistic effect, low price and who bought who. In the last quarter, two months after Lenovo has generated about 10 million dollars in synergies in this quarter (July-September) there are at least 11 million -1,200 million dollars could be further access.
"21st Century": Integration in what order? Yang: First the easy part. Behind the eight departments difficult to integrate than the previous eight. Because behind the eight departments were front-line departments have a direct impact directly on the bottom line, such as sales, product, supply chain. Lenovo's headquarters are now equivalent to wearing a hat, the business unit or the past, IBM, Lenovo's PC business and business in the past run independently.
Another difficulty is the integration of persons worldwide, and now the Chinese team and the U.S. team require frequent communication.
