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December 4, 2004
An Unknown Giant Flexes Its MusclesBy DAVID BARBOZA
HANGHAI, Dec. 3 - Lenovo. Who?
Although virtually unknown in the United States, Lenovo - said to be in talks to buy I.B.M.'s personal computer business - is China's largest PC maker and the world's fastest-growing one. And it is emblematic of the ambitions of emergent Chinese industrial giants to create global brand names and capture market share beyond their own borders. Formerly relegated to a low profile as the cheap assemblers for the rest of the industrialized world, Chinese companies now have their sights set on becoming global powers in their own right.
The Lenovo Group, partly owned by the Chinese government, had sales of over $3 billion last year and is currently ranked eighth globally among PC makers. It is the overall leader in Asia outside Japan, where NEC and other Japanese companies dominate. (I.B.M.'s Japan unit is in the top five there, though, adding to I.B.M.'s allure for Lenovo.)
Based in Beijing and listed on the Hong Kong Stock Exchange, Lenovo has made its mark by producing a line of low-cost PC's, some selling here in China for as little as $360. With huge sales to Chinese government agencies and schools, and immune from the tariffs levied against foreign brands like Dell, Hewlett-Packard and - so far - I.B.M., Levono now controls about 27 percent of the Chinese PC market, which is about to pass Japan to become the world's second-largest personal computer market after the United States.
But the company is experiencing growing pains as it tries to hold onto market share at home while also venturing into Western markets.
The company's stock price recently plummeted after Lenovo reported worse-than-expected earnings, citing a price war in China with Dell, Hewlett-Packard and I.B.M.
Lenovo may not end up acquiring I.B.M.'s PC business, as at least one other potential buyer is also in negotiations. And other bidders may emerge.
But if Lenovo succeeds, acquiring the I.B.M. unit would ease some of the competitive pressure domestically. Recognizing that profitable growth within China may be increasingly hard to come by as outsiders flock to the world's potentially biggest consumer market, Levono also knows it needs to expand its global share of the market beyond its current 2.6 percent. Acquiring the I.B.M. business, now ranked third globally, would raise that share to 8.6 percent - still third, but a bit closer to Dell (18 percent) and Hewlett-Packard (16.1 percent).
As part of its global campaign, the company earlier this year shed its longstanding name, Legend, in favor of the current one, then promptly entered the global brand sweepstakes by signing on as a sponsor of the 2006 Winter Olympics in Turin and the 2008 Olympic Games in Beijing.
To what extent, and for how long, Lenovo or another buyer of I.B.M.'s PC business would be able to make use of the I.B.M. name would be a crucial question in any negotiations. But the company has made it known that it is open to deals. "Acquisition is one of the possibilities," Mary Ma, Lenovo's chief financial officer, said in an interview last year. Founded in 1984 by a group of Chinese scientists with government financing, the company then known as Legend started out as a distributor of computers and printers, selling I.B.M., AST and Hewlett-Packard models in China.
In the late 1980's, however, as an exemplar of a trend that would play out in many Chinese industries, the company moved higher up the food chain by beginning to design its own personal computers. By 1997, it had passed I.B.M. to become the largest seller of personal computers in China.
But competing globally on its own, especially against Dell's vaunted manufacturing efficiencies, could be a stretch for Lenovo. An American venture capitalist who recently toured the Lenovo factory in Shanghai said that he had been surprised that it lacked the bustling, just-in-time urgency that he had observed on a similar tour of a Dell assembly line in Round Rock, Tex.
At the Lenovo site, pallets of computers were stacked high to the ceiling, according to the investor, who insisted on not being identified, and he said the production line was moving slowly compared with Dell's.
Moreover, with China's economy growing rapidly, increasingly affluent and brand-conscious people are turning to Dell, I.B.M. and Hewlett-Packard computers. Executives at Lenovo are intent on competing with those better-known brands, saying Lenovo is not interested in simply being known as the lower-cost supplier. I.B.M.'s product line would automatically push Lenovo up the cachet curve.
Most crucial to Lenovo's worldwide aspirations, analysts say, would be I.B.M.'s ThinkPad line of portable computers, which even among American customers has a much more devoted following than many of the other products in I.B.M.'s line.
"This is their steppingstone to a global market," said James Mulvenon, a China researcher who is deputy director of the Center for Intelligence Research and Analysis, a Washington research center.
Otherwise, he said, Lenovo faces the same brand-recognition problem that has plagued the Taiwan computer maker Acer, which ranks fifth globally, but is an also-ran in the United States market. "This a story about a Chinese company adopting an American brand," Mr. Mulvenon said.
Keith Bradsher, in Hong Kong, and John Markoff, in San Francisco, contributed reporting for this article.
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December 4, 2004BASEBALL ANALYSIS
Yanks May Have to Pay to Send Giambi AwayBy JACK CURRY
he Yankees are making plans for the 2005 season, desperately hoping that Jason Giambi will be a former Yankee but operating, at least for the moment, as if he will be with them.
It is obvious that the Yankees do not want Giambi any longer, and they would love it if his admission about using steroids allowed them to escape the four seasons and $82 million left on his contract.
But even though the Yankees are trying to develop a case against Giambi, they are skeptical about getting his contract voided. They are preaching caution as they tiptoe through a complicated off-season that has become more muddled. Still, interviews with individuals in the baseball world with connections to Giambi and the Yankees indicate that both sides are aware that one possible way to part with each other is through a buyout of Giambi's contract.
A buyout could be attractive for the Yankees because it would sidestep the fact that Giambi' s admission of illegal steroid use, contained in an article in The San Francisco Chronicle about Giambi's purported grand jury testimony in the Balco case, amounts to hearsay at this point and carries no legal heft.
On the other hand, any buyout plan would have to win the approval of the Major League Baseball Players Association, and that might not be possible, no matter what the terms.
In a buyout, the Yankees and Giambi would have to determine how much money each would give up to end their relationship. How much would the free-spending Yankees give Giambi to have him drift away? How much would Giambi, who has long been uncomfortable in New York, accept to leave?
Start at the midway point. Would the Yankees give Giambi $41 million. It is an alarming sum of money to pay someone who was unavailable for most of the 2004 season and who violated the team's trust.
But the Yankees could easily view it as a way to save $41 million, too, and trudge forward. Especially if they conclude that they do not have a strong enough case to pursue anything legally.
But the players association would certainly object to Giambi's sacrificing half of his contract. The union balked when Alex Rodriguez tried last winter to defer enough money on his contract to save the Boston Red Sox $28 million and allow him to escape from the Texas Rangers. In the end, the union's stance killed the trade to Boston, and Rodriguez instead became a Yankee.
The union's approval of any Giambi buyout would be needed because it would represent a devaluation of an existing contract, as was the case with Rodriguez. And a devaluation cannot occur without the union's approval, regardless of the player's desire.
If the Yankees no longer wanted Giambi, the union would undoubtedly maintain that the club should simply release him and pay him the remainder of his contract. Giambi would then be free to sign with any team he wanted, with that team owing him only baseball's minimum salary.
That would be an intensely costly option for the Yankees, and one they might resist. But could Giambi prevail on the union to compromise on the buyout issue and get him out of an uncomfortable situation in New York? It's not unthinkable, even if it's not likely.
For the moment, the Yankees are incensed with Giambi. A baseball official who was briefed on a meeting between the Yankees and the commissioner's office on Thursday said the Yankees felt Giambi misled the team's medical staff while he was being treated for an intestinal parasite and a pituitary tumor last season. The official said the Yankees told the commissioner's office that the team questioned Giambi about possible use of steroids and that he denied using them, which had an impact on the medical treatment he received.
When the Yankees signed Giambi to a seven-year, $120 million contract before the 2002 season, they knew there were steroid rumors about some players, including Giambi. Still, they chased after him, ignored that he was a designated hitter masquerading as a first baseman and ended up with a player who was good for one season, disappointing the next and a nonentity in 2004.
Now the Yankees are stuck with Giambi, a 33-year-old player they privately consider useless.
If they can find a way to sever ties, through a buyout or other means, Giambi might end up back in Oakland, where he was the American League's Most Valuable Player on a very talented team.
The A's, whose fans are probably more forgiving than those in New York, could portray Giambi's return as an effort to help a former star resurrect his career.
The Yankees would probably be content with that storyline, too.
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Narrower Bush Win Seen in Ohio
By Brian FalerSpecial to The Washington PostSaturday, December 4, 2004; Page A03
President Bush's margin of victory in the all-important battleground state of Ohio appears to have been closer than previously believed.
The Cleveland Plain Dealer and the Associated Press, which conducted separate county-by-county surveys of the final election results there, found that Democratic presidential nominee John F. Kerry netted more than 17,000 votes in the post-Election Day ballot count. That would shrink the president's margin there from about 136,000 to 119,000 -- or about 2 percent of the 5.5 million ballots cast.
A spokesman for the Ohio secretary of state said the media finding "seems to be accurate" but otherwise declined to comment on the reports because the state will not disclose its official election results until Monday. That tally will include provisional and absentee ballots that were collected, analyzed and counted after the election.
Carlo LoParo, the spokesman, estimated that 77 percent of the 155,000 provisional ballots cast in the Buckeye State were ultimately counted. The remainder were discarded -- usually, he said, because the voter had not registered to vote.
But the state's official tally will not be the final word on the election. A pair of third-party presidential candidates, who complain that reports of election irregularities there have been ignored, are expected to formally request a recount of the presidential vote next week.
Meanwhile, Rep. John Conyers Jr. (Mich.) and nine other Democrats on the House Judiciary Committee have written to Ohio Secretary of State J. Kenneth Blackwell (R), asking him to respond to a list of reports of problems at the polls on Nov. 2. "We are concerned that these complaints constitute a troubled portrait of a one-two punch that may well have altered and suppressed votes, particularly minority and Democratic votes," the letter said.
LoParo denied that there were significant problems at Ohio's polls but said Blackwell would respond to the lawmakers' inquiry. "We certainly answer our mail," he said.
© 2004 The Washington Post Company
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Iraq Suicide Attacks Kill 14, Wound Dozens
2 hours, 38 minutes ago
By SAMEER N. YACOUB, Associated Press Writer
BAGHDAD, Iraq - Suicide car bombs struck Iraqi police and Kurdish militiamen in Baghdad and northern Iraq (news - web sites) on Saturday, killing at least 14 people, wounding dozens, and again demonstrating the lethal reach of Iraq's insurgency just weeks ahead of crucial elections.
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Iraq Suicide Attacks Kill 14, Injure 59(AP Video)

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The U.S. commander in Iraq, Gen. John Abizaid, acknowledged that the country's homegrown forces aren't yet up to the task of ensuring secure elections, necessitating the planned increase in U.S. troops. More than 40 Iraqis have been killed in the last two days alone.
But U.N. special envoy Lakhdar Brahimi criticized the military's hardline approach to the insurgency and said credible elections cannot be held Jan. 30 under the current conditions.
Meanwhile, the insurgents pursued their deadly campaign against American troops. Two U.S. soldiers were killed by roadside bombs in Baghdad and north of the capital Saturday, and the military said two other Americans died the day before in suicide car bombings of their post near the Jordanian border.
With the country still so unstable and elections eight weeks away, the U.S. military plans to increase its troop strength from 138,000 to about 150,000 by mid-January — slightly more than during the 2003 invasion that toppled Saddam Hussein (news - web sites)'s regime — in an attempt to keep order during the vote. The primary concern is Iraq's Sunnis, who generally oppose the vote and are believed to be fueling the insurgency.
In candid remarks, Abizaid admitted the troop increase wasn't what Washington had envisioned.
"It had been our hope that we would be able to have a combination of increases that mainly were Iraqi troops' increases," Abizaid, the head of U.S. Central Command, said.
"And while the Iraqi troops are larger in number than they used to be, those forces have to be seasoned more, trained more. So, it's necessary to bring more American forces."
Speaking to reporters at a regional security conference in Bahrain, Abizaid declined to speculate on when the Iraqi forces would be ready or say how many they now number. But he said they were "constantly improving."
Brahimi, however, said the United States and the Iraqi government should reconsider their reliance on force to eliminate insurgents.
In an interview published Saturday in a Dutch newspaper, the U.N. envoy insisted the country cannot go ahead with the elections "if conditions remain the same."
"It's a mess in Iraq. The international community, hopefully with the Americans, must help the Iraqis to clean up the mess," he said.
Brahimi, an Algerian, was sent to Iraq to help form the interim government that took power on June 28.
Officials had hoped the recent U.S.-led assault on the insurgent hotbed of Fallujah would put the rebels on the defensive. But the latest attacks showed they are still highly capable of hitting back where they choose.
Saturday's car bombs in Baghdad went off nearly simultaneously at about 9:30 a.m. by a police station across the street from a checkpoint leading to the heavily fortified Green Zone, which houses Iraqi government offices and several foreign missions.
Bursts of automatic fire followed the thunderous detonation, which shook windows hundred of yards away in buildings on the opposite side of the Tigris River.
Health officials said the bodies of seven people killed by the blast and 59 wounded were brought to two Baghdad hospitals. Officials said most of the victims were police officers, but the identities of all the dead were not yet known.
Adel Hassan, a policeman who survived the attack with head injuries, said at a hospital crammed with victims that a "suicide car bomber sped into our place (the police station) ... and then there was an explosion."
The attack came a day after a highly coordinated assault on a police station west of Baghdad in which insurgents killed 16 police, looted the station's armory and freed dozens of prisoners.
"We are moving toward the elections while the insurgents, terrorists and the former Baath regime members will try to destroy the security and they will try to build an environment that the people feel that there is no security," Iraqi Defense Ministry official Broska Noory Shausse said.
In the northern city of Mosul, a suicide bomber exploded his vehicle alongside a bus carrying Kurdish militiamen, killing at least seven and wounding three, an official said. Along with Iraq's majority Shiites, Kurds back the upcoming elections, and the bombing may have been an attempt to drag them into a civil war.
The militiamen were being brought in from the mainly Kurdish province of Irbil to guard Kurdish offices in Mosul, where U.S. and Iraqi forces have been battling insurgents following last month's uprising.
In fierce fighting on Friday, gunmen tried to seize four police stations but were repelled, the U.S. military said. About 70 guerrillas also ambushed a U.S. patrol with roadside bombs, rocket-propelled grenades and small-arms fire. After regrouping, U.S. and Iraqi forces struck back, killing more than two dozen fighters, the military said.
In eastern Baghdad, a roadside bomb killed an American soldier and wounded five others Saturday, the military said. Another bomb near the town of Ghalabiyah, six miles west of the insurgent hotbed of Baqouba, north of Baghdad, hit a truck in a U.S. military convoy, killing a soldier and wounding another, Master Sgt. Robert Powell said.
A suicide car bomb hit an American forward operating base near Iraq's border with Jordan on Friday, killing two U.S. service members, the U.S. command said Saturday. A Marine spokesman said the attack was directed at members of the 1st Marine Expeditionary Force.
Iraq closed its Karameh border crossing into Jordan until further notice, Jordanian officials said.
The killings — along with two Americans killed in roadside bombs in Baghdad and Kirkuk on Friday — brought to at least 1,269 the number of U.S. military members to have died since the war began in March 2003, according to an Associated Press count.
Also Saturday, a hospital official said the bodies of four slain men wearing Iraqi National Guards uniforms were found in northwestern Iraq. Friday's grisly discovery in Tal Afar takes to at least 70 the number of remains discovered in and around that town and Mosul, about 30 miles to the east, since Nov. 18.
Police in the northern city of Samarra also came under attack Saturday. Mortars were fired at a station after midnight, wounding two officers. Gunmen injured two policemen in another attack at about 10 a.m., according to police Maj. Sadoon Ahmed Matroud.
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