Yahoo Co-Founder Jerry Yang Joins Lenovo’s Board as Observer

Lenovo Group Ltd., the world’s second-biggest maker of personal computers, said Yahoo! Inc. co-founder Jerry Yang will join the board of directors as an observer amid its expansion into smartphones and tablets.

Yang, 44, will attend board meetings to share his “experience and perspective as an Internet and technology pioneer,” Beijing-based Lenovo said in an e-mailed statement yesterday. He will not have the power to vote at any board meeting and may not exercise any other rights of a director.

“Jerry’s perspective, experience and proven entrepreneurial spirit will help us continue to drive growth and expand our business,” Lenovo Chief Executive Officer Yang Yuanqing said in the e-mailed statement.

Lenovo is expanding beyond PCs to take on rivals including Apple Inc. and Samsung Electronics Co. in smartphones, tablets and Internet-ready televisions.

The company last year also made its first acquisition of a software vendor, Stoneware Inc., that Lenovo said at the time could be used to build a “public cloud” for consumers. Such a service would compete with Apple’s iCloud that lets users store music, movies and applications. Yang’s experience with Yahoo would help the company grow in such areas, said Jean-Louis Lafayeedney, an analyst at JI Asia in Hong Kong.

“Jerry Yang brings good quality Internet experience to a hardware company which has ambitions to harvest revenues from content,” said Lafayeedney.

Yang’s Fees

Jerry Yang and Yang Yuanqing were both unavailable for additional comment, Angela Lee, a Beijing-based spokeswoman for Lenovo, said in an e-mail.

Lenovo will pay Jerry Yang a cash fee of $61,875 and offer rights to equity in the company with a value of $135,000 annually, it said in a statement to the Hong Kong stock exchange.

Lenovo shares fell 0.5 percent to close at HK$8.63 in Hong Kong yesterday, before the announcement. They have gained 25 percent in the past year, outpacing the 8.8 percent rise in the benchmark Hang Seng Index.

After co-founding Yahoo with David Filo in 1995 as doctoral students at Stanford University, Yang helped build it into the world’s most popular website. Yahoo lost its luster in recent years as it ceded share to Google Inc. Yang served as Yahoo’s chief executive officer from June 2007 to January 2009, and also served as a director on its board until Jan. 17, 2012.

‘ITunes-Type Model’

Lenovo could be moving toward a “sort of iTunes-type business model” or running server farms which they then rent out to users of Lenovo hardware, much in the same way Sony Corp.’s Playstation does for Netflix Inc., Lafayeedney said.

“The ecosystem mandate is the ultimate aim for a hardware maker like Lenovo, which would leverage hardware to capture content sales,” Lafayeedney said. “If in China Lenovo can persuade media content providers to bring exclusivity to Lenovo, or indeed charge for software, this would be the way.”

Inducting Yang as an observer to its board means Lenovo must be considering creation of some service with music, video, or web storage, said Vincent Chen, an analyst at Yuanta Securities Co. in Taipei.

“It is a cloud environment,” Chen said. “Every player is trying to build its own community in the cloud. Internet transaction and ads can be the ultimate goal, for which Jerry should be able to provide valuable suggestions.”

— With assistance by Edmond Lococo

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