NEC sells shares in Lenovo, Japan PC joint venture unaffected

NEC acquired over 280 million shares last year when forming a Japanese PC joint venture

NEC has sold for about US$230 million shares in Chinese computer maker Lenovo it acquired last year when the companies formed a joint venture to produce PCs in Japan.

The sale, completed to an unnamed securities firm in Japan, was made purely for financial reasons and will not change the business relationship between the companies, NEC spokesman Joseph Jasper said Wednesday. NEC lost a net ¥110 billion (US$1.4 billion) last fiscal year and is aiming to swing to a ¥20 billion in profit during the current period.

"There will be no impact on any of the existing contracts or forward-looking plans or the share ratio for the joint venture," Jasper said.

The NEC-Lenovo joint venture, formed last year, is the dominant personal computer maker in Japan, with about 25 percent share of the market, according to a report from data firm IDC for the April-June quarter, although the overall market is shrinking on a yearly basis. Fujitsu is second with 15 percent.

The companies announced they would form the joint venture in January of last year, with Lenovo to hold a 51 percent share and NEC a 49 percent share. As part of the deal, NEC acquired about 281 million shares worth about US$175 million in Lenovo at the time. The original deal called for NEC to hold the shares for at least two years, but Lenovo waived that requirement for reasons including "the financing needs of NEC," and the business relationship between the two companies, it said in a statement issued late Tuesday to the Hong Kong stock exchange where its shares are listed.

NEC, which sells computers under the Valuestar and LaVie brands, was the market leader but had been unable to turn a profit when it made the deal in 2011. The joint venture has helped give it access to cheaper Chinese supplies and manufacturing, while providing Lenovo with access to the Japanese market, which often requires complicated relationships with large retailers and suppliers.

The computers made by the joint venture are assembled in Japan and sold under NEC brands. Lenovo also sells computers under its own ThinkPad brand in Japan, which it mainly manufactures in China.

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Jay Alabaster

IDG News Service
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