China's Lenovo hires former Dell, IBM exec

SAN FRANCISCO/SHANGHAI- Lenovo Group Ltd., the world's No. 3 personal computer maker, has snared a top executive from rival Dell Inc. to serve as chief executive in a latest challenge to the dominance of the top PC seller.

William Amelio, Dell's former Asia-Pacific chief and an architect of the US titan's growth in the fast-expanding region, joins Lenovo as its new CEO, Lenovo said in a statement.

Analysts say the move can prove wise for Lenovo in the longer run, as Amelio brings his knowledge to a company that dominates the Chinese market but whose top management is deemed to possess scant experience on a global stage.

For Dell, Amelio's departure is its second loss in two months of a major Asian executive - a setback for the company as it pursues an aggressive expansion in the region.

Amelio replaced Stephen Ward, whom Lenovo inherited from International Business Machines Corp. when it bought Big Blue's PC assets earlier this year for US$1.25 billion in a bid to move beyond China and become a major global player.

Lenovo asked to suspend its Hong Kong shares on Wednesday pending an announcement to the stock exchange, an executive said. But trading could resume as soon as Thursday, she added.

"Our board and Steve Ward made the decision together, that this is the right time for the transition," Lenovo Chairman Yang Yuanqing told Reuters in a telephone interview.

"Right now we are entering a new phase, to pursue profitable growth more aggressively."

New York-based Lenovo said Ward would continue with the company as a consultant.

Amelio and Ward had worked together at IBM for about five years, when Amelio headed up IBM's PC operations, overseeing manufacturing and supply chain matters.

BATTLE FOR MARKET SHARE

Lenovo, which controls more than a third of the Chinese market - the world's second largest - lags Dell by far in global market share.

Lenovo commanded about 7.7 per cent of the global PC market in the third quarter, behind Dell's 18 per cent and Hewlett-Packard Co.'s 16 per cent, according to research firms IDC and Gartner.

Yang said a crucial part of the company's growth strategy outside China would be targeting small and medium enterprise customers.

Such clients now account for about a quarter of its non-Chinese business, which is nearly all corporate customers, lagging a global industry average. Large corporations make up the rest.

"I believe we have the potential, this opportunity to grow (at) twice the industry average growth," Yang told Reuters.

Ward helped lift IBM's former PC division from the loss making column and brought it into the black after Lenovo's landmark acquisition in May.

Amelio is now taking the reins as Lenovo strengthens its leading position in China, a market where it claims a 35 per cent share, and in India, where Lenovo is the No. 2 PC seller.

BNP Paribas analyst Marvin Lo said Amelio's experience at Dell and IBM should be valuable assets in the transformation of the company into a global PC player. But he added that the move also comes with some short-term risk.

"With his departure, I'm wondering if there will be any instability within the middle management at Lenovo," he added.

Investors were cool initially to the Lenovo-IBM deal when it was first announced late last year, but have gradually warmed to the idea as the Chinese company showed signs of good execution.

Its shares are up 60 per cent this year, making the stock the best performer of the 33 components in the Hang Seng Index

- REUTERS