(Editor’s Note: Updates with comment from a Lenovo spokesman)
Lenovo (992:HK) executives can’t seem to stop talking about BlackBerry (BBRY). First, the Chinese computer maker’s chief financial officer, Wong Wai Ming, told Bloomberg News in January that the company was “looking at all opportunities,” including the Canadian company formerly known as Research in Motion. Now BlackBerry’s share price is rising because Lenovo Chief Executive Officer Yang Yuanqing suggested his company is seriously considering acquiring it. Yang told French financial newspaper Les Échos that a deal with Waterloo (Ontario)-based BlackBerry “could possibly make sense, but first I need to analyze the market and understand what exactly the importance of this company is.”
A Lenovo spokesman says the company has not done “any specific evaluation or activity” for a BlackBerry deal. “Lenovo confirms that the company evaluates all growth opportunities on a regular basis,” Brion Tingler said in an emailed statement. “We continue to focus on driving organic growth while at the same time, as we have stated many times in the past, we will consider M&A when it is aligned with our Protect and Attack strategy.”
It’s easy to see why Yang is interested in a foreign brand such as BlackBerry. Unlike many Chinese companies just beginning to move beyond their home market, Lenovo is already a global player. As the dominant brand in China, it is also growing fast in Europe, Africa, and the Middle East. In the fourth quarter, Lenovo was the only one of the top five PC companies to enjoy any growth in those markets, according to data from Gartner.
Lenovo has consistently shown it’s not afraid of buying down-on-their-luck Western brands to expand its reach. That’s the tactic the company followed for its computer business in 2005, when it bought the PC division of IBM (IBM). The rough integration that followed precipitated Yang taking over in 2009 from former Dell (DELL) executive William Amelio. Eventually, though, the deal helped Lenovo join the top ranks of global computer makers: The company is neck-and-neck with Hewlett Packard (HPQ) for bragging rights as the world’s largest PC company, having passed HP in the third quarter before the American company regained its lead.
Yang and others at Lenovo know they can’t afford to stick with computers. Lenovo is growing—sales increased 8.2 percent in the fourth quarter—but the overall pie is shrinking fast: PC shipments fell almost 5 percent in the quarter. That’s why company executives talk about a “PC+” era for the company. They’ve had success in China, where Lenovo has in three years vaulted from nowhere to No. 2 in the smartphone market, ahead of Apple (AAPL) and behind only Samsung Electronics (005930:KS).
Repeating that success outside China will be challenging. Abroad, Lenovo won’t enjoy the same consumer brand strength or unmatched distribution network. BlackBerry remains a favorite among business customers, and it could be just what Lenovo needs to overcome its global weaknesses and compete against Apple and Samsung. Buying a tired brand with strong ties to the corporate world worked once for Lenovo. Yang might be looking for a repeat.