May 2 (Bloomberg) -- Lenovo Group Ltd. is seeking acquisitions to regain the world's third-largest personal- computer seller ranking lost to Acer Inc. last year, Chairman Yang Yuanqing said.

``We are not satisfied with our current market share and global ranking,'' Yang said in an interview with Bloomberg Television broadcast today. ``I believe there will be further consolidation in the industry and we hope to seize the opportunity'' to buy, he said.

Lenovo, the Chinese company that shot to prominence with the 2005 purchase of International Business Machines Corp.'s PC unit, had its European expansion plans foiled last year when Acer bought Packard Bell BV. Computer makers such as Fujitsu Siemens Computers (Holding) BV may be a target for Lenovo, said Joseph Ho, a Daiwa Institute of Research analyst.

``It makes sense for Lenovo to want to acquire as it has the financial muscle,'' said Ho, who rates Lenovo ``outperform.'' ``The question is what to acquire and at what price.''

Lenovo had cash and equivalents of $2.2 billion as of Dec. 31, according to the latest information from the company, which gets more than half of sales from Asia.

The $1.25 billion purchase of the IBM business three years ago made the company the world's third-largest computer maker. Lenovo, which moved its headquarters to Raleigh, North Carolina, after the acquisition, lost the position to Acer in the second half of 2007, after the Taipei-based rival bought Packard Bell.

Yang ruled out acquiring Acer and declined to identify target companies. Ralf Lanzrath, a spokesman for Maarssen, Netherlands-based Fujitsu Siemens, couldn't be reached on his office phone after working hours.

Share Value

Lenovo's current market value is HK$58.3 billion ($7.5 billion), about 6 percent of the size of industry leader Hewlett- Packard Co., according to data compiled by Bloomberg. Acer is valued at NT$163.3 billion, or $5.4 billion.

Shares of Lenovo rose 5.4 percent to HK$6.28 at the close of trading in Hong Kong, while the MSCI AC Asia Pacific Information Technology Index advanced 1.5 percent. The stock has more than doubled since the IBM purchase, outperforming the benchmark, which gained 40 percent.

Acer shares climbed 2.9 percent to NT$67.90 on the Taiwan Stock Exchange.

During the first quarter, Lenovo shipped 21 percent more PCs than a year earlier on demand in Asia, researcher IDC said on April 16. That trails Acer, whose 66 percent growth is the fastest among the top four PC makers.

Fighting for Share

Lenovo, the Chinese PC market leader, is also fighting to stem market-share losses in the nation to companies including Hewlett-Packard and Dell Inc., which are expanding their distribution networks.

The U.S. makers are introducing low-cost PCs, contributing to a decline in Lenovo's China market share to 29 percent as of Dec. 31, from 36 percent a year earlier.

Lenovo won't adopt that strategy to expand outside China, Yang said in the interview in Beijing April 25.

``Because of our Chinese heritage, it's easy for people to think we make low-price and low-quality products,'' Yang said. ``We want to be known for innovative and high-quality products and if we enter the low-end PC market aggressively now, it will damage our image.''

For companies seeking to grab a larger share of the Chinese market, including Dell and Hewlett-Packard, domestic PC makers such as Founder Technology Group Corp. and Tsinghua Tongfang Co. may be takeover targets, said Charles Guo, a Hong Kong-based analyst at JPMorgan.

Greater Access

``Acquiring Chinese players like Founder and Tongfang will give them greater access to the market, and Lenovo is worried about this,'' Guo said.

Calls to the offices of Founder and Tsinghua Tongfang weren't answered on a public holiday in China.

The analyst said Lenovo's revenue from the Greater China region, including Taiwan and Hong Kong, will rise this year while growth may slow in Europe and the U.S.

During the first quarter, China's economy expanded 10.6 percent, while incomes climbed 11.5 percent in urban areas and 18.5 percent in rural regions.

Lenovo, which gained the right to use the IBM name until 2010 as part of the U.S. purchase, in January began offering its own IdeaPad PCs in 14 markets, led by the U.S., Australia, France and Russia.

``The most important thing is growing our market share, more than making money,'' Yang said.

To contact the reporter on this story: Janet Ong in Beijing jong3@bloomberg.net; Stephen Engle in Beijing at sengle1@bloomberg.net.

Last Updated: May 2, 2008 04:44 EDT