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February 17, 2017

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Lenovo sees ‘challenges’ as earnings decline 67%

CHINESE technology giant Lenovo yesterday said it faced “sizeable challenges” as it saw profit plunge by more than two thirds.

The Beijing-based company remains the world’s largest PC maker, but has been trying to broaden its smartphone business as the market for personal computers fizzles.

But it has struggled to keep pace with Apple and Android rivals.

Net profit fell by 67 percent year on year to US$98 million in the October-December quarter, the company said in a statement.

That came in well short of analysts’ estimates by Bloomberg News which on average predicted earnings of US$145.9million.

Revenues fell 6 percent from a year earlier.

“Lenovo faced sizeable challenges in its three main lines of business, namely data center, mobile devices, and PCs and smart devices,” the firm said.

The company is battling as consumers opt for smartphones instead of PCs.

Rising component prices are also weighing on profits.

Sales of the company’s Moto and Lenovo-branded phones slipped 23 percent year on year in the three months through December.

Sales of its data center business, which includes servers, storage, software and services, also tumbled 20 percent compared with the previous year.

However, Lenovo’s PC and smart device business, which includes tablets, still saw sales growth of 2 percent year on year. That was spurred by strong growth in North America, the company said.

US firms HP and Dell follow Lenovo as leaders in the global PC market. All three increased their share of the market in the final quarter of last year, according to industry trackers.

Lenovo said in January that it is launching a “Smart Assistant” which recognizes user’s voices to conduct tasks including web searches and playing music.



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