Lenovo computes hefty losses, as sluggish PCs hurt

By Fan Feifei | China Daily | Updated: 2017-08-19 09:34

China's giant personal computer maker Lenovo Group Ltd posted a quarterly loss on Friday-blaming higher costs and sluggish sales in the personal computer and smartphone market.

The $72 million slide into the red for the three months ended June was its first quarterly loss since September 2015, and compared with a profit of $173 million for the same period last year.

The company said supply constraints for key components in the sector, as well as cost increases, would continue to bring short-term challenges in its business environment.

Lenovo recently lost its position as the world's biggest PC maker, as its rivals HP Inc and Dell Inc launched new models to win back customers. The Beijing-based company said in a statement that its revenue for the period was just over $10 billion, which was virtually unchanged year-on-year.

Revenue from its PC and smart device business group, which accounts for almost 70 percent of Lenovo's total income, came in at $7 billion, for flat year-over-year growth.

Its PC business in the June quarter recorded share gains in Asia Pacific, Europe and Latin America, and shipped 12.4 million units worldwide, down 6 percent year-on-year. In its home market of China, Lenovo enjoyed an almost 36 percent market share.

According to a report by market consultancy IDC, in the first quarter Lenovo accounted for 20.4 percent of the world's PC market while HP had 21.8 percent share in terms of PC shipments.

Lenovo is betting on Moto and Lenovo-branded smartphones to revive its mobile unit, but remains outside the top five in its home market, IDC said. Sales in the mobile division saw a 2 percent year-on-year gain to $1.7 billion.

Its data center business group reported year-on-year revenue growth in Western Europe and North America of 11 percent and 8 percent respectively.

Lenovo Chairman and CEO Yang Yuanqing is making efforts to rejuvenate its core PC business. The company has invited Liu Jun, its former executive vice-president to take charge of its biggest business sector, and has joined hands with e-commerce giant in a bid to sell 80 billion yuan ($12 billion) worth of consumer electronics within three years.

Lenovo also announced a $1.2 billion investment in AI research and development, and is pursuing smart solutions and partnerships in the manufacturing, healthcare and transportation sectors.

"Lenovo faces fierce competition in the global PC market as consumers turn to smartphones and tablets, which led to a decline in purchasing demand," said Jason Low, a tech industry analyst at Canalys.

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