Lenovo Group Limited (ADR) (LNVGY), Dell Inc. (DELL): The World’s Biggest PC Vendor Is Ridiculously Cheap

The fact that Lenovo Group Limited (ADR) (OTCMKTS:LNVGY) has managed to grow its PC revenues faster than its competitors shows that there’s something special about its PCs. I believe that what is special about Lenovo PCs and notebooks isn’t a special feature or an awesome design but the fact that for a very low price Lenovo does provide quality and high performance. As the PC market contracts, I believe that consumers will become even more sensitive to price and performance and this may actually be a great opportunity for Lenovo to steal more market share from its competitors.

It’s always good to ask ourselves if the PC market is actually dying or it is merely transforming itself. I believe that the PC industry will not fade away. It is evolving and the PC+ concept that Lenovo Group Limited (ADR) (OTCMKTS:LNVGY) is promoting seems to be getting it right. For more information about the future of the PC Industry, check Leo Sun’s amazing article “The PC Market Will Survive, but the Old Gods Could Die.”

Final words

Not all PC makers find it easy to shift to tablets or smartphones. Dell Inc. (NASDAQ:DELL), for example, might not be able to participate in the tablet market if Microsoft decides to manufacture its tablets in house, just like they did with the Surface which directly competes against the tablets of most PC manufacturers. Not to mention that Dell’s relationship with Microsoft is already complicated: Microsoft has agreed to advance Dell a $2 billion loan to be used for its leveraged buyout.

Overall, Lenovo Group Limited (ADR) (OTCMKTS:LNVGY) seems to be doing the right thing at the right time. Protect and use the cash cow to start new businesses, focus on making what you are really good at, and take advantage of competitors’ weaknesses to gain even more share. The new Lenovo is in the making and it will be not only a PC vendor. It follows that its future price-to-earnings ratio will not resemble the multiple of a typical PC vendor.

Adrian Campos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article The World’s Biggest PC Vendor Is Ridiculously Cheap originally appeared on Fool.com.

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