The Motley Fool’s readers have spoken, and I have heeded their cries. After months of pointing out CEO gaffes and faux pas, I’ve decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first, and are generally deserving of praise from investors. For reference, here’s my previous selection.
This week, I say duplication be damned! I’m going to double-up on this series for the first time ever and yet again highlight Lenovo Group Limited (ADR) (OTCMKTS:LNVGY) CEO Yang Yuanqing for his sector-topping performance and absolutely top-notch charitable giving.
Kudos to you, Mr. Yuanqing
You know there has to be something special about this CEO if I’m highlighting him twice in the past 14 months — and Yuanqing lives up to every bit of the hype!
Source: Jonathan Sin, Flickr.
As you might have suspected, the PC sector is an absolute mess. Rapid growth in smartphones and tablets is removing the need for individuals to purchase a laptop or PC in their home, and sales are eroding faster than many global manufacturers can say “earnings warning.”
The downdraft in PC sales prompted Hewlett-Packard Company (NYSE:HPQ) to completely revamp its product line toward the cloud while shedding 29,000 workers in order to reduce its annual expenses by $3.5 billion. The story has been very similar with Dell Inc. (NASDAQ:DELL), which is betting heavily on a favorable vote from shareholders that will allow the company to be taken private by Michael Dell and private-equity firm Silver Lake Partners for $13.75 a share plus a $0.13 special dividend.
Lenovo Group Limited (ADR) (OTCMKTS:LNVGY) hasn’t been able to completely escape the weakness apparent in the PC sector, but through innovative new offerings and competitive pricing, it’s been able to dramatically outperform its peers. According to research firms Gartner Inc (NYSE:IT) and IDC, Lenovo’s PC shipments shrank by 0.6% to 1.4% (depending on which source you choose). By comparison, Dell Inc. (NASDAQ:DELL) saw its PC shipments shrink by anywhere from 3.9% to 4.2% while Hewlett-Packard Company (NYSE:HPQ) saw an even worse 4.8% to 7.7% dip in shipments. The results were even more dismal for Acer, which saw PC shipments fall by more than 32%!
If you read through Lenovo Group Limited (ADR) (OTCMKTS:LNVGY)’s annual report, you’ll get a completely different and far better picture. For the full year, Lenovo reported PC shipments rose 10.2% compared to an industrywide decline of 8%. Furthermore, Lenovo delivered a 15% increase in sales to $34 billion thanks in part to rapid growth in its non-PC sales (i.e., smartphone sales), and saw its global market share top HP for the No. 1 spot. Even Lenovo’s desktop PC sales even held their own, coming in flat versus an industrywide decline of 12.2%! Practically everywhere you look, Lenovo was outperforming!
CEO Yang Yuanqing, Source: Cory M. Grenier, Wikimedia Commons.
A step above his peers
The legacy of Yuanqing extends far beyond just his incredible outperformance with Lenovo Group Limited (ADR) (OTCMKTS:LNVGY) and its shareholders’ and employees’ pocketbooks.
If you go back exactly 10 years, to September 2003, when PC sales were really ramping up, Lenovo Group Limited (ADR) (OTCMKTS:LNVGY) would have returned shareholders a nominal 126% share price gain. Factoring in dividends, according to Yahoo! Finance, and this gain would have spiked to more than 770%! “How have HP and Dell done over that same period?” one might wonder. HP shares are up just a nominal 8% and a split-adjusted 24% over the past decade while Dell shares have plummeted by a nominal 60%, or a split-adjusted 59%. In short, Lenovo is running circles around its PC peers.