Lenovo Ppt Final Com Stg

© 2004 IBM CorporationDecember 8, 2004 |

IBM and Lenovo

New Leadership in Global PCs

New advantages for all PC customers

2 © 2004 IBM CorporationDecember 8, 2004

Leading Productsand Brands

World Class Service& Support

Global Reach

New GrowthOpportunities

Scale

IBM and LenovoEnter into Long-term Strategic Alliance

Create Powerful New Global Leader


The New Lenovo: Overview

• $13B sales (last 12 months)

• 19,000 employees

• WW Headquarters: New York, USA

• Principal operations: Raleigh, Beijing

• Public company with ownership positions by Lenovo and IBM

• Closing date: 2Q05

• Est. combined share data: 34% in China


Customer Value

Continued IBM Sales Coverage

Global Business Partner Network

Ease of Doing Business

IBM Financing

Innovative Products /

Broader Portfolio

World Class Service and

Support


IBM IT

Transaction Summary

• Lenovo acquires IBM PC operations

• IBM: ownership stake, long-term alliances with the new Lenovo in sales, services and financing

Ownership

PublicLenovo

HoldingsIBM

45% 19%36%

IBM Sales

IBM Services

IBM FinancingThe new Lenovo

(Lenovo + IBM PC Business)

“Today’s announcement further strengthens IBM’s focus on the enterprise, while creating a new global business

that is better positioned to capture the opportunities in the PC industry going forward.” – Sam Palmisano

LenovoIBM

The new Lenovo


Lenovo Group LTD

• Founded 1984

• FY04: Revenue, $3B; Net Profit, $135M

• Approx. 9,000 employees

• #1 market share in China for seven years(27% market share, source: IDC)

• #1 PC company in Asia Pacific (excl. Japan)

• #1 IT company in China

• Small Business and Consumer market strength

• Market capitalization: approx. $2.6B Cell Phones

• Mobilehandsets

Home Products

• Desktop PCs• Tianyi notebooks • Xuri notebooks• Inkjet printers

CommercialProducts

• Desktops• Soleil notebooks• Scanners• Laser printers

Servers

• 886 Servers • Creator of

Deepcomp 6800 supercomputer


IBM Personal Computing Division

• Established in 1981, creator of personal computer

• $9B 2003 revenue; 10,000 employees in PCD and supporting operations

• #2 in WW commercial notebooks revenue• Undisputed leader in enterprise PC design,

business productivity, and lowest total cost of ownership

• Enterprise and Mid-market strength(15% share total client)

• Client, notebook and SMB double-digit growth, outpacing industry

• ThinkPad notebooks have won over 1,000 industry awards

• 100-million PCs shipped


Global PCs: Where are the opportunities?IBM focuses on the Enterprise market. As a result, PCD revenue is weighted

towards Large Enterprise/Mid-market customers. There is however, significant growth opportunity in the Small Business / Consumer market.

PC market growth opportunity of $16B* from 2004 – 2006 led by SB / Consumer

SB / Consumer

Segment Revenue Mix

LE / MM57%

LE / MM29%

SB / Consumer43%

SB / Consumer71%

0%

20%

40%

60%

80%

100%

Industry IBM

LE / MM

Source: IDC PC Tracker

Source: International Planning & Research

*Source: IDC PC Tracker


SegmentProduct Mix

Geography

Lenovo % of RevenueIBM % of Revenue

SB / Consumer

43% LE / MM, 57%

Lenovo % of Revenue

AP100%

IBM % of Revenue

AP32% Americas

42%

EMEA26%

Lenovo % of Revenue

Notebook18%

Desktop82%

IBM % of Revenue

Notebook60%

Desktop40%

The New Lenovo:Leveraging strengths to pursue opportunities

Data Source: IDC PC Tracker / Internal sources

LE / MM

17%

83%

SB / Consumer


• Top six emerging countries will represent 39% of the 2004 – 2006 growth opportunity*

• IBM is performing well on the premium product segments in these countries with the proper sales and distribution channels to reach these markets

• The new Lenovo will have a broader product portfolio to capture this opportunity

Global PCs: Where are the opportunities?

Source: International Planning & Research


A Perfect Fit between Complementary Organizations

• Premium Global PC Brand– Most recognized technology brand

globally

• Enterprise / Mid-Market Expertise– Leader in business productivity and

lowest total cost of ownership

• Notebook Leader– Leading technology enhanced

notebook product offering

• #1 IT Brand in China– Most recognized technology

brand in China

• Consumer / Small Business Expertise– Differentiated consumer/small business

and extensive retail network

• Efficient Operational Platform– Low cost infrastructure and

manufacturing scale

• Global Sales, Financing, Fulfillment and Service Network

– Global sales network with financing, fulfillment and service support


Lenovo’s Chairman Yang

.. We at Lenovo understand that people are at the core of a successful company.

.. Our two companies also share a common vision to create an undisputed global leader in the PC industry.

.. we’re both fully committed to success – success on the international stage, and success through producing the best PCs in the world for both enterprises and consumers.

.. welcome to our family. I’m honored that you will be joining us and I hope that we’ll get to know each other a lot better in the years to come.

Yuanqing Yang


Customers

Innovation

Integrity

Synergy inValues

Dedication to every client’s success

Innovation that matters – for our company and for the world

Trust and personal responsibilityin all relationships

Serving customers

Innovative and “can do” spirit

Accuracy and truth-seeking

Trustworthiness and integrity

© 2004 IBM CorporationDecember 8, 2004 |

The New Lenovo AnnouncementHR Transition

Peter HaddadVP Human Resources, PSG


The New Lenovo Value Proposition

• The new Lenovo will offer an exciting opportunity to participate in a new and expanding business venture

• The new Lenovo will offer an attractive employment package

• Lenovo and IBM are committed to make this a smooth transition that minimizes personal disruptions and loss of work productivity

The transaction is expected to be completed no later than the second quarter 2005, and requires the approval of Lenovo’s shareholders and review by relevant regulatory organizations. It is the intention of IBM and Lenovo to reach and sign local agreements after completion of additional legal requirements and industrial relations processes where applicable in some countries outside the United States.


IBM Employees Joining the new Lenovo

• Employees who are part of PCD and their primary work responsibility is in support of the PCD mission/business

• Employees in other business units whose primary work responsibility is in support of the PCD mission/business

• Additional employees deemed necessary to meet the new Lenovo’s requirements may be selected based upon business need and an assessment of their current job responsibilities


Attractive Employee Compensation & Benefit Package*

• The new Lenovo will provide total compensation and benefits that are comparable to IBM’s:

– Cash Compensation

– Same or Similar Job Responsibilities

– Comprehensive Benefit Plans

– Pension / Retirement Plan**

– Vacation

*Certain countries, generally in EMEA, require that these compensation packages undergo further legal and industrial relations review before signing local agreements. Management plans to seek packages that are comparable in value to the package currently offered to employees in those countries in accordance with applicable laws.**In Countries where these plans are offered today


Attractive Employee Compensation & Benefit Package* (continued)

• Employee Health Benefit Package– Immediate access for employee & dependents – no exclusions

– Pre-existing conditions are covered

– Credit for current year plan deductibles

• Years of service credit for:– The new Lenovo Vacation Plan will be based on combined IBM and

Lenovo years of service and will provide the same benefits as the IBM plan guidelines

– IBM accrued and unused vacation transfers with you according to country legal standards

– Other selected benefit programs (varies by geography)


US Benefits: the new Lenovo• Pension Plans with comparable benefits and service credit for purposes of determining

eligibility and vesting:– IBM Personal Pension Plan (Prior DB Plan) – new Lenovo Pension Plan (DB)– IBM Personal Pension Account (Cash Balance) – new Lenovo Defined Contribution Plan– IBM Savings Plan – the new Lenovo 401(k) Plan

• Health benefits– Continuous coverage

– Medical

– Dental

• Compensation– Same base salary

– Performance bonus targets maintained for one year

– Similar incentive and sales commission plans

• Vacation – Same as IBM plan

• More details about the new Lenovo benefits will be forthcoming


IBM / Lenovo Transition Schedule

Employees join the new Lenovo and transition based on final country closing dates

Proposed IBM/Lenovo transaction closing Second Quarter 2005

New Lenovo provides details of benefits offerings

First Quarter 2005

In-scope certification processDecember 8, 2004 – January 7, 2005

Employee Department MeetingsDecember 8 – 16, 2004

Management BriefingsDecember 8 – 9, 2004

Employee Announcement Meeting- PCD Website published with new Lenovo specifics; to be updated regularly

December 8, 2004

Note: Dates represent anticipated transition plan and may vary based on transition progress


The new Lenovo will provide:

• Attractive Employment Package– Competitive compensation– Continuity of benefits

• Smooth Employee Transition

• Career Growth opportunities as we expand our markets

• Recognition of innovation, performance and leadership

• A chance to run our own show!

HR Summary


Education

Lenovo Ppt Final Com Stg