JOIN USLenovo registers Q2 net loss of $714 million
China’s Lenovo Group reversed into its biggest-ever quarterly loss in the July-September period, soaking up acquisition and restructuring costs to cope with tepid demand in the global personal computer and smartphone markets.
The world’s biggest maker of personal computers said on Thursday that it booked a net loss of $714 million for its fiscal second quarter, compared with a net profit of $262 million a year ago. Beijing-based Lenovo last year made two multi-billion-dollar acquisitions — for Google’s Motorola handset unit and IBM’s low-end server business — in a response to the shrinking global market for personal computers.
In August, Lenovo had said it would cut its workforce by about five per cent, write off unsold inventory and take charges. “Lenovo is successfully executing its business realignment plan. As announced in the Q1 earnings report, Lenovo incurred $599 million in restructuring costs and a $324 million one-time charge to clear smartphone inventory in Q2,” it said in a statement.
Lenovo’s revenue, however, grew 16 per cent year-on-year to $12.1 billion in the said period from $10.4 billion, driven by strong momentum in PC and mobile business across markets, including India.
“With strong execution, Lenovo acted swiftly and decisively to address challenges, while still delivering better than previous quarter results,” Lenovo Chairman and CEO Yang Yuanqing said.
He added that in the PC, the company hit record share with good profitability and for the mobile business, its strategy to shift growth focus to outside of China continues to pay off as Lenovo has gained share and improved margin.
In the PC Group (PCG) that includes PCs and Windows tablets, Lenovo’s quarterly sales were $8.1 billion, down 17 per cent year-over-year with foreign exchange fluctuations hurting demand in Europe, the Middle East and Africa (EMEA) and Brazil.
Smartphone shipment
“India grew 99 per cent year-over-year, hitting an impressive record-high 27 per cent share (in PC segment)... In Mobile, Lenovo had strong smartphone shipment growth of 135 per cent year-over-year, driven by strong momentum in India and inclusion of Moto,” it said.
In the Mobile Business Group, which includes products from Motorola and Lenovo-branded phones, Android tablets and smart TVs, sales were at $2.7 billion, up 104 per cent y-o-y due to the inclusion of revenues from Motorola.
“In the key emerging markets of Indonesia, Russia, India and Brazil, Lenovo outgrew the smartphone market by 12, 175, 48 and 4 points, respectively,” it said.
Big Tumble
World’s biggest maker of personal computers books a net loss of $714 million
Beijing-based Lenovo had said it would cut its workforce by about five per cent
Lenovo incurs $599 million in restructuring costs, and $324 million one-time charge to clear smartphone inventory in second quarter