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Lenovo shares slump more than 8 percent after Japan's NEC exits
HONG KONG |
HONG KONG (Reuters) - Shares of PC maker Lenovo Group Ltd dropped as much as 8.1 percent on Wednesday after Japan's cash-strapped NEC Corp sold its entire stake in the company in a deal worth 18 billion yen ($229.62 million).
The fall in the stock took Lenovo shares below HK$6.30, the lower end of the range at which the deal was priced, suggesting investors were expecting further weakness in the stock.
A Lenovo executive said that the stake sale would not impact a PC and tablet business venture the two formed last January to focus on the Japanese market.
"In reality, NEC could sell those shares after two years anyway as per contract. All we have done is to let them do it 10 months earlier. This has no bearing on our joint venture," said Roderick Lappin, vice president of Lenovo Group and executive chairman of Lenovo NEC Holdings.
Lenovo, the world's No.2 PC maker by sales, was also scheduled to host a press conference in Sao Paulo later in the day with local media reporting that the company was acquiring CCE, a Brazilian electronics manufacturer.
China is still the company's main sales driver, but Lenovo has been aggressive about expanding into other regions, primarily through overseas acquisitions.
According to Morgan Stanley, Lenovo is close to breaking even in emerging markets, but Brazil is where the majority of its losses are incurred, largely due to high import taxes and weak distribution.
Morgan Stanley maintains an "overweight" rating on the stock.
At 0305 GMT, Lenovo's shares were down 7.70 percent in Hong Kong.
($1 = 78.3900 Japanese yen)
(Reporting by Vikram Subhedar; Additional reporting by Mari Saito in TOKYO; Editing by Matt Driskill)
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