Misfiring Lenovo hires Ford director to help with revamp
Hold onto your hats people, Lenovo to invest $1B in AI as hardware sales falter
Lenovo has hired an experienced executive with financial, M&A and AI chops following a year of declining revenues amid continued efforts to reduce its over-reliance on the struggling PC market.
John Thornton, who is joining as an independent non-exec director and member of the Nomination and Governance Committee, already holds director- and chairmanships at private investment businesses, AI biz SparkCognition and Ford Motor Company.
Also crammed into his schedule is sitting on the advisory board of Tsinghua University’s School of Economics and Management; Chairman Emeritus of the Brookings Institution of Washington; co-chairman of the Asia Society; and board member of China Investment Corporation, McKinsey Advisory Council, Schwarzmann Scholars and the African Leadership Academy.
Now he’ll be paid to provide consultancy to Lenovo, which said Thornton comes with “extensive experience in merger and acquisition execution, capital allocation and financial management, international business and global partnerships, talent development and allocation and partnership culture, risk management, and government and regulatory affairs.”
That’s quite the checklist, and the company clearly feels it is needed: last week’s financial results for Lenovo’s Q1 of its fiscal 2024 showed a 66 percent plunge in net profit, albeit better than the 75 percent dive in the prior quarter.
The Intelligent Devices Group - which houses PCs and smartphones - accounted for $10.26 billion of the $12.9 billion in total sales, and although Lenovo is forecasting an uplift in PC orders, it is trying to spin up revenues generated by its other biz units - server and storage, and services - to diversify its revenue streams.
The challenge is that in addition to struggles in the device market, Lenovo reckons the infrastructure tech market is also facing headwinds as customers deal with a post-pandemic economy.
What to do? Step up AI, seen by some vendors as a panacea, an area Lenovo is to plough more money into. “Over the next three years, we will invest an additional $1 billion to accelerate AI deployment for businesses around the world, focusing on AI devices, AI infrastructure and AI solutions,” said Yanqing Yang, Lenovo boss, on last week’s conference call.
“We will continue to invest in developing AI-ready and AI-optimized infrastructure, such as AI Edge, AI Hybrid Cloud as well as server and storage that support AI-centric workloads,” he added.
Lenovo recently made public a fresh line of AI server products for Chinese customers, designed to tap into demand from local businesses wanting to develop AI services including generative AI.
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In addition to experience of AI, newbie Thornton can also draw upon another area that might help should US and China trade relations continue to falter. His business dealings with China stretch back to 1997, according to local media reports, when he was an exec at Goldman Sachs as it advised China Telecom on its IPO.
Thornton, sometimes referred to as a “China friend,” joins at a time when an all out trade war with the US is thinkable, so maybe he’ll do more than just help to heal Lenovo revenue misses. ®