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Tue 15 Apr 2008 05:12 PM

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Lenovo mulls Middle East acquisitions

World's fourth-largest computer maker looking to expand in region to offset slowdown in US economy.

Lenovo Group, the world's fourth-largest computer maker, is considering acquisitions to expand outside Asia into markets including the Middle East and Turkey, an executive said on Tuesday.

Lenovo, which bought IBM's loss-making PC arm in 2005, wants to expand into countries where computer use is less widespread as a slowdown in the US economy threatens to curb spending on technology products.

"We can make big acquisitions, we can do it by cash, selling shares or notes," Senior Vice-President and Chief Financial Officer (CFO) Wong Wai Ming told reporters on the sidelines of a conference in Dubai, the commercial hub of the Arab world.

Gulf Arab states' economies producing a fifth of the world's oil, including Saudi Arabia and the UAE, are surging after a fivefold rise in oil prices since 2002.

The boom is attracting global firms in sectors from financial services to technology hoping to cash in on growth in consumer and corporate spending.

"We're looking at various opportunities [in the region]: joint ventures, acquisitions or strategic partnerships," Wai Ming said, without giving details.

"We have a small presence here. This is one area, including Turkey, that we are studying," he said.

Dell was in talks with a unit owned by the Dubai government to set up a joint venture that could bolster its sales in the Middle East, its chief executive was quoted as saying in the Wall Street Journal this month.

Lenovo, which commands a third of the booming Chinese market and leads Asia in computer sales, is also trying to cement its place in the US consumer arena, where it introduced its first computers in January, Wai Ming said.

The firm beat market expectations as it tripled quarterly earnings in the third quarter on strong Asian demand.

"The US is a developed market which has been affected by the subprime crisis and there are definitely opportunities that are available," he said.

"Generally we want to grow organically... M&As are one of our options. We don't have a constraint on how much it could be," he said.

While there are concerns of a deceleration in spending on information technology products in the US, Lenovo hopes expansion into Bric countries - Brazil, Russia, India and China - will "contribute more to revenues", Wai Ming said.

Merrill Lynch upgraded Lenovo Group to buy from neutral in January after the firm agreed to sell its cellphone arm - which saw shipments drop 31% in the third quarter - for $100 million, allowing it to focus on its personal computer business. (Reuters)

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