Whom You Know: IBM Acquisition Press Conference Remarks from Yang Yuanqing and Gerry Smith Remarks from Yang Yuanqing, Chairman and CEO, Lenovo

Monday, September 29, 2014

IBM Acquisition Press Conference Remarks from Yang Yuanqing and Gerry Smith Remarks from Yang Yuanqing, Chairman and CEO, Lenovo

Good morning everyone.

Thank you for joining us on another historic day to discuss the successful close of our acquisition of the IBM x86 server business. We will officially finalize the deal on Oct. 1 and become the number 3 server company in the world.

To close this acquisition, we have worked closely securing approvals with a number of regulatory bodies. We have built trust and understanding in this process. These successful reviews are even more proof that Lenovo is a transparent and reliable global company.

Lenovo has big plans for servers. Gerry will talk more about this in a few minutes. But now we definitely have even more capability to win around the world. The System X business gives Lenovo a global brand known for innovation capability. We know building a great brand is critical, and now we have one of the best.

And this brand was built by more than 6,000 highly skilled talents, who will now bring to Lenovo world-class knowledge and deep experience in enterprise. They have created more than 1,100 patents that become part of our rich IP portfolio. And they will join us from a network of 34 R&D and 7 manufacturing facilities. This creates a global enterprise product R&D and production platform across Beijing, Shanghai, Yokohama, Raleigh, Silicon Valley, Taipei and Brazil.

We have a clear plan to reach our goal of $5 billion in revenue, with profitable growth, in 1 year:

First, we will ensure a smooth integration of the IBM business and its talented team.

Second, we will make sure that our existing customers have a seamless transition. I am confident that our leaders – Gerry Smith who runs the overall enterprise business, and Adalio Sanchez, who has been the long-time leader of the IBM x86 business – can achieve this.

Third, we will leverage our unique competitive advantage. With Lenovo’s operational excellence and efficiency, we can beat ODM/OEM competitors. Meanwhile, with IBM’s reputation, quality and innovation, we can win against top name brands.

Finally, we will expand our geographical reach. Especially in China and other emerging markets, which are already our strongholds, Lenovo can quickly realize hyper growth.

With the principles of trust, respect and compromise, we will unite our teams. And with our proven formula -- a clear strategy, innovative products, operational excellence and a diverse global team and culture – I am confident we will win in the market again.

To add some color to today’s pure enterprise business announcement, I also want to share a sneak preview of our products, regarding our PC and tablet business. Just next week we plan to announce some new members of our Yoga PC and tablet family. They are all very innovative and stylish, we believe they will become very popular presents for the holiday season.

Okay, let’s turn back to today’s topic. Now, I would like to turn the call over to Gerry Smith to share our enterprise strategy.

Remarks from Gerry Smith, Executive Vice President of Lenovo Group and President of Enterprise Business Group and Americas Group

Thanks YY. I am also very pleased this historic day is here. The new team from IBM can look forward to an exciting road ahead. With close, Lenovo will be number three in the x86 market. Getting to number one will be a challenge, but we are 110% committed to WINNING in the enterprise, just as in PCs.

One of the reasons we will succeed is our commitment to providing the most advanced and secure x86 technology available. We can say this with great confidence because the IBM x86 System x business is coming over intact, including the IP, the vaunted security practices and the trusted executive team.

This is the same path we took a decade ago when we joined forces with IBM’s PC division. And everyone knows what happened there: with hard work, a willingness to make tough decisions, persistence, and a fierce competitive spirit we built a leader. This acquisition has many things in common with that groundbreaking deal. Back then our competitors said we could not win together. They said our cultures would clash. They said that our merger would fail. We proved them wrong on every count. Like Yuanqing said, we expect to repeat the same success we had in PCs as we expand into the Enterprise.

Let me say a few words on security. As a leading, publicly-traded global technology company selling to nearly every Fortune 100 company, our customers demand and deserve the highest security and confidence in our products and our company. We are continually enhancing our security policies, standards and practices, which are based on widely recognized industry best practices and international standards including ISO 27000, NIST and EU Data Privacy.

Even more, it’s no secret that Lenovo and IBM worked proactively to secure clearance from government agencies around the world. Our success in all of these rigorous reviews presents the most credible, and strongest, endorsement of Lenovo’s corporate character, commitment to security, transparency and trustworthiness.

I want to close by talking about the new Enterprise Business Group strategy:

First, we will protect our customer base leveraging the new System x business from IBM and win the mid and high-end of x86, growing our share in China, Europe, Middle East and Africa, Japan, North America and the channel worldwide and leveraging ThinkServer across all entry and mid-range customers worldwide. Our newly combined sales force will sell the System x and ThinkServer product lines, giving our business reach into customer segments which neither had access to before. We are very excited about that

Second, we will attack growth opportunities in more advanced technologies to grow at a market premium.

Third, we will maintain and grow our profit pools in Maintenance and Services.

Fourth we will invest in innovation and world class designs utilizing our newly combined global teams.

Finally, we will drive efficiency and scale across the business to improve productivity and profitability.

Our target is to build a profitable $5 billion Enterprise business within a year. This won’t be easy. We will be tested. But in the long run, we will make this combination work, and we will build a sustainable, profitable, growing business that is the number 1 enterprise company in the world.

I am eager to get started, to bring the fight to our competitors, and to bring the best solutions in the world to our customers everywhere.

Thank you.

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