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TheStreet Open House

Aggressive Lenovo Might Be Worth Your Investment

Lenovo gets more access to consumers in the mature United States and fast-growing Latin America, market research firm Strategy Analytics says on its blog. More than 80% of Lenovo's sales today come from China, but its post-purchase 6% world smartphone market share will "instantly" fall in line behind only Samsung with 32% and Apple (AAPL) with 15%, according to the research firm.

Motorola, in turn, can strengthen its position in Lenovo's home country, where it has sold handsets long before the arrival of smartphones. Rivals "worried" by the Lenovo-Motorola deal include China's Huawei (002502.SZ), ZTE (ZTCOF), TCL-Alcatel (2618.HK) and iPhone lookalike builder Xiaomi, Strategy Analytics forecasts.

Lenovo should also leverage Motorola's edge in patents, another advantage to selling smartphones outside China. "Motorola has a lot of intellectual property, so when it's licensed for smartphones that can help Lenovo sell outside China," says Tracy Tsai, research director with Gartner in Taipei.

Lenovo, known more for making PCs than smartphones, needs whatever edge it can get in mobile devices. It's trying, alongside rivals including Acer and Asustek Computer, to recast itself as a smartphone maker to grab investor attention.

Lenovo's shares hit 14-year and nearly record highs after the Motorola acquisition was announced last month. They weren't doing terribly before the announcement. Lenovo is a safe investment in China as well as in consumer electronics.

At the time of publication the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Ralph Jennings lived in Beijing for seven years as a writer, editor, student, teacher and consumer. Originally from Portland, Oregon, Jennings has covered financial markets in Asia since 2008. His news reports often examine markets from a macro-policy angle on behalf of individual traders as well as institutional investors. In his view, China is a volatile country that can be understood only by watching it closely week in, week out, followed by analysis mixed with hands-on perspectives. He currently lives in Taipei, where he covers general and financial news in East Asia and studies for a master's degree. He also watches China from the unique perspective of Taiwan's traditional Chinese society with its unique economic and political experience.
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