Logging off: Lenovo investors desert shares on Sony rumour, downgrades

HONG KONG — Investors ditched Lenovo shares after the four-day Chinese New Year holiday, as weekend speculation of a third acquisition by the Chinese computer-maker in as many weeks added to concerns about its aggressive deal-making.

Lenovo’s shares closed down 16.4 per cent at HK$8.41 yesterday on the first full day of trading since its US$2.9-billion (S$3.7 billion) takeover of the Motorola handset business owned by Google was announced last week. The sell-off erased US$2.2 billion (S$2.8 billion) from its market value yesterday in the biggest decline since January 2009.

That deal, on top of the US$2.3 billion deal for IBM’s low-end server business announced a week earlier, led to a string of downgrades from analysts at banks including CCB, Jefferies, Morgan Stanley and UBS.

Over the weekend, a Japanese press report touted Lenovo as a buyer for Sony’s Vaio loss-making laptop business outside Japan. Sony has said the report is inaccurate, while Lenovo declined to comment on rumours.

“M&A is aggressively expanding Lenovo’s business bandwidth,” Morgan Stanley’s Grace Chen wrote to clients. “We like the acquisition of IBM’s entry-level servers, but the purchase of Motorola Mobility should more than offset the gains, at least in the near term.” THE FINANCIAL TIMES