Lenovo Adds Business Units Ahead of $2.3 Billion IBM Deal

Lenovo Group Ltd. (992) is adding new business units for enterprise computing and cloud services ahead of the company’s planned $2.3 billion purchase of International Business Machines Corp. (IBM)’s low-end server unit.

The new enterprise unit will absorb the business acquired from IBM once the purchase clears all regulatory approvals, Lenovo said in a statement. It will be led by Gerry Smith, the senior vice president who already heads Lenovo’s Americas Group. Smith will retain that responsibility and be promoted to executive vice president, the company said.

Lenovo Chief Executive Officer Yang Yuanqing is countering the worst slump in the global personal computer industry by adding new products such as smartphones and tablets. The company said last week the IBM unit would have wider profit margins than Lenovo’s traditional PCs, while also adding about $4.6 billion of annual revenue from sales of the servers that run corporate networks.

In addition to the company’s PC business group and its mobile business group for smartphones and tablets, Lenovo is also creating a unit called Ecosystem and Cloud Services to expand sales of products for Google Inc. (GOOG)’s Android and Microsoft Corp. (MSFT)’s Windows operating systems, Lenovo said.

The cloud group will be led by George He, the senior vice president who currently serves as chief technology officer. He will be replaced in that role by Peter Hortensius, Lenovo said.

Lenovo’s PC unit will now be run by Gianfranco Lanci, who currently heads the company’s business in Europe, the Middle East and Africa. Lanci, who left Acer Inc. (2353) as chief executive officer in 2011 and joined Lenovo in 2012 as a senior vice president, has been promoted to Lenovo’s executive vice president and chief operating officer, the company said.

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net

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

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