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Lenovo 3Q Profit Fell On Weak Macroeconomic Environment

Lenovo 3Q Profit Fell On Weak Macroeconomic Environment

Enterprise & IT Feb 16,2017 0

Lenovo Group Ltd on Thursday posted a 67 percent slide in third-quarter net profit, as supply constraints and a weak macroeconomic environment weighed.

Profit fell to $98 million over the three months through December, from $300 million in the same period a year earlier. The company'srevenue fell 6 percent to $12.2 billion.

Component supply constraints across the industries in which Lenovo operates impacted performance, in addition to a challenging macro environment and global markets, the company said.

Despite the slow PC sales, Lenovo saw its core PC business book 2 percent revenue growth to $8.6 billion, reversing a seven-quarter downward trend. Shipments rose 2 percent to 15.7 million units, helped by a 5 percent rise in commercial PCs.

"Despite ongoing macro-economic uncertainties and the two new businesses still in transition, Lenovo delivered a solid performance last quarter," said Yang Yuanqing, Lenovo Chairman and Chief Executive Officer. "Our PC business remains strong, our Mobile business has made steady progress, and our Data Center business now has a clear improvement plan in place. Although it takes time to build the core competence in these two new growth engines, we are confident to achieve breakeven and profitable growth in them."

Lenovo also saw strong growth in tablets, up ten percent year-over-year, outperforming the market by 29 points, as well as significant year-over-year increases in high-growth product lines such as gaming PC (up 71 percent), Chromebook (up 76 percent ), and detachables (up 91 percent).

Shipments in its mobile phone unit fell 26 percent, though that represented improvement since the first quarter.

For Lenovo's Data Center Group (DCG), which includes servers, storage, software and services, sales in the third fiscal quarter were US$1.1 billion, down 20 percent year-over-year, and three percent quarter-to-quarter.

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