Lenovo, NEC say alliance solid despite stock selloff

Bloomberg

Lenovo, the world’s second-largest computer maker, and NEC both said they are committed to their partnership in Japan after NEC sold its stake in the Chinese company to raise cash.

NEC Corp. sold its entire 2.7 percent holding in Lenovo Group Ltd. to make use of its assets, spokesman Takehiko Kato said Wednesday. The ¥18 billion sale resulted in a gain of about ¥4 billion, he said.

There won’t be any change in NEC’s venture with Lenovo, Kato said.

Lenovo had issued 281.1 million shares to NEC in exchange for a 51 percent stake in a joint venture between the companies. The shares were subject to a so-called lockup restriction that prohibited NEC from selling them until two years after the deal closed on July 1, 2011.

Lenovo shares have risen 39 percent since then, and the Chinese company Tuesday waived the restriction prohibiting NEC from selling stock.

“We believe this is an appropriate action based on NEC’s requests and financing needs as well as our shared commitment to our long-term, ongoing strategic partnership,” Brion Tingler, a Lenovo spokesman, said in an email Wednesday. “We will continue to look for ways to expand and extend our strategic relationship.”

Lenovo and NEC have “momentum in the market” and the two expect to “build a leader in Japan together,” Tingler said. He referred questions about specifics of the sale to NEC.

NEC is cutting 10,000 jobs, or about 8.6 percent of its workforce, after it posted a third annual loss in four years on slumping demand for its smartphones and notebook computers. The company plans to provide ¥17.5 billion in loans to Renesas Electronics Corp. in October to help the unprofitable chipmaker trim losses.

The electronics maker sold the stake ahead of schedule as “it was able to foster trust with Lenovo,” NEC’s Kato said.