Serious Money: The Cost of Pushing Chinese Yuan Higher

Sheldon Liber — Thu, 22 Apr 2010 14:00:00 EST

Filed under: International Markets, Rants and Raves, Competitive Strategy, Ford Motor (F), China, International Business Machines (IBM), Anadarko Petroleum (APC), Serious Money, Headline News, Marathon Oil (MRO)

"Be careful what you wish for" goes the ancient Chinese proverb. The United States government, pushed and prodded by its industrial leaders to get the Chinese to raise the value of the Yuan, should heed these wise words.

The goal, of course, is to make U.S. goods and services cheaper, thereby improving the balance of trade. The problem is that it makes everything cheaper.

It is true that it would support the remaining manufacturing base, software companies, commodities and consulting services. However, this is but a portion of what we have to offer.

What happens if the Yuan increases by 20% against the dollar, and they decide to buy International Business Machines (IBM) the company, not just IBM mainframes? This is not so far fetched. Lenovo bought the ThinkPad notebook computer division from IBM and now it sells Lenovo ThinkPads to us. They would be able to buy IBM 20% cheaper than you or I could buy it.

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Serious Money: The Cost of Pushing Chinese Yuan Higher originally appeared on BloggingStocks on Thu, 22 Apr 2010 14:00:00 EST. Please see our terms for use of feeds.

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Lenovo's fourth quarter profit doubles as shipments grow rapidly

Brian White — Fri, 23 May 2008 09:47:00 EST

Filed under: Earnings Reports, Products and Services, Industry, Dell (DELL), Hewlett-Packard (HPQ)

Lenovo Group Ltd. (OTC: LNVGY), which purchased IBM Corp.'s (NYSE: IBM) personal computer assets years ago, reported an outstanding financial quarter of this week. The Chinese company saw dramatic shipment increases into emerging markets as well as the Americas (even with weak demand in the U.S.). Shipments grew the fastest in the European region, with a 30% growth rate from the year-ago period.

Lenovo is behind Hewlett-Packard Co (NYSE: HPQ), Dell, Inc. (NASDAQ: DELL) and Taiwan's Acer in terms of global PC sales, but don't tell it that. The company's fourth-quarter profit more than doubled to $140 million from the $60 million year-ago quarterly figure. In the PC industry, that's a jump extraordinaire. Although the PC industry's growth rose 15% in the company's latest quarter, Lenovo topped that with an overall growth figure of 21%.

This is even more startling considering that Lenovo exports quite a bit to the U.S., which is in the midst of a consumer and business spending slowdown. This is where it comes in handy to have your sales dispersed in such a way that one region of the world doesn't make or break your company. This is the fruits Lenovo is enjoying at the moment, as it has a very evenly distributed sales mix in every global region. Meanwhile, 60% of Dell's 2007 sales came from the Americas only -- and we wonder why the company's sales have faltered.

Lenovo's fourth quarter profit doubles as shipments grow rapidly originally appeared on BloggingStocks on Fri, 23 May 2008 09:47:00 EST. Please see our terms for use of feeds.

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