Lenovo bucks trend, keeping things in-house

Updated: 2012-07-23 07:57

By Tuo Yannan (China Daily)

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Last year it invested $300 million in a Taiwan-based original equipment manufacturing company in Hefei, Anhui province, to set up a new production plant.

For its entire 2011 fiscal year ending in March, Lenovo said it made $29.6 billion in sales. During that time, it commanded 12.9 percent of the global PC market, confirming it as the second-largest PC producer and fourth-largest tablet PC producer measured by market share.

The company would deliver "a high single digit to mid-teen" percentage growth in earnings per share in the fiscal year, according to an earlier ICBC report.

Lenovo shares fell to their lowest in six months in Hong Kong trading after ICBC International Research Ltd said the company's growth outlook is weakening.

Global computer shipments will rise 5 percent in 2012, which will be a "challenging year" because of the debt crisis in the eurozone economy, researcher IDC forecast last month. Lenovo shares have dropped 26 percent in the past two months, compared with a 6.2 percent decline in the benchmark Hang Seng Index amid concern the economic slowdown will hurt computer demand.

"The recent price correction was attributable to the weakening PC growth outlook and its stretched valuation," said Kary Sei, a Hong Kong-based analyst with ICBC. "In view of the slowing global economy, PC demand is likely on the downside."

Jeff Shafer, a Lenovo spokesman, said: "We continue to be confident in our strategy and execution and in our overall performance in PCs."

Lenovo bucks trend, keeping things in-house

"As we have stated before, it remains our expectation to grow faster than the market and we continue to make the long-term investments in areas such as product innovation and building our brand that will enable us to maintain our momentum."

Lenovo will grow "at a significant premium to market", said Milko Van Duijl, Lenovo's president for Asia-Pacific and Latin America, in a June 28 interview in Hong Kong. He didn't give a specific growth forecast at the time.

Bloomberg contributed to this story.

Contact the writer at tuoyannan@chinadaily.com.cn

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