Lenovo banks on $1 BEELLION Moto turnaround in SIX quarters

Lenovo boss Yang Yuanqing has boasted that he can wipe Motorola Mobility’s $1bn-a-year (£600m) losses in just six quarters once his firm takes the helm at the handset maker.

Yang told Bloomberg on the sidelines of Mobile World Congress this week that he could make the turnaround without the need to cut any jobs.

“Don’t be scared by the $1bn-a-year loss,” Yang told the news service.

“We will improve that even from day one. Google is very good at software, ecosystems and services. But we are stronger in the manufacturing of devices.”

With Moto’s gross margins still “pretty decent”, Yang reckons profits will pour in as the firm flogs more handsets to emerging markets. Costs will also be cut from the rather generically titled “internal communications and computing services”, the report claimed.

Even so, Motorola recorded $1bn in operating losses last year according to Bloomberg data, so Yang will need all of Lenovo’s guile and manufacturing know-how to turn things around – that is, assuming the deal gets the green light from regulators.

Success is by no means a given. The firm will also be going through a major acquisition effort to integrate IBM’s x86 server division into the Lenovo family, again depending on the whim of regulators.

Yang is taking no chances with either deal, having hired some high profile Washington lobbyists to make sure the acquisitions are approved by the influential Committee on Foreign Investment in the US (CFIUS).

Lenovo managed to turn around IBM’s ailing PC business, which it acquired in 2004, to the point where today the Chinese hardware giant is the world’s number one PC vendor.

However, the revival in its fortunes took several years. Canalys APAC MD Rachel Lashford told The Reg recently that it took five years from the takeover date for the division “to be operating at its full potential again”.

Yang is obviously hoping that Lenovo’s experience in the mid-2000s will help it go one better this time and take Moto back into the black in as little as 18 months. ®