China's Lenovo Group Ltd, the world's largest personal
computer (PC) manufacturer by shipments, on
Thursday said it returned to profit in its second fiscal
quarter, beating analyst estimates, due primarily to
gains from an asset sale.
Growth in the consumer PC market in particular has
been sluggish in recent years as tablet computers and
increasingly capable smartphones become widespread.
Lenovo is the world's largest PC vendor with a 21.3
percent market share, but its lead over second-ranked
HP Inc has shrunk to the narrowest margin since the
Chinese firm took the top position in 2013, showed
data from researcher IDC.
"In the short term, market conditions will remain
challenging," Chairman and Chief Executive Yang
Yuanqing said in a filing to the Hong Kong Stock
Exchange. Lenovo aims to maintain leadership in PCs
through industry consolidation while building on its
mobile and data centre businesses, he said.
Profit reached $157 million (roughly Rs. 1,048 crores)
for the three months ended September 30, from its
worst-ever quarterly loss of $714 million (roughly Rs.
4,768 crores) in the same period a year earlier when
Lenovo booked one-off costs to restructure and
integrate the mobile business of Motorola.
(Also see: Dell, Lenovo Spotted Working on Surface
Studio and Surface Pro Rivals)
The result, helped by a property disposal gain of $206
million, compared with a Thomson Reuters
SmartEstimate of $131 million drawn from the
estimates of 14 analysts.
Revenue fell 8 percent to $11.2 billion (roughly Rs.
74,776 crores), versus the $11.02 billion analyst
estimate.
For the first half, net profit was $330 million (roughly
Rs. 2,203 crores) versus a loss of $609 million a year
earlier, while revenue fell 7 percent to $21.3 billion. It
said revenue fell 8 percent in its PC and smart device
business, 10 percent in its mobile business and 4
percent in its data centre.
"The Group will develop new smart devices, powered
by cloud and enriched with services," Yang said in the
filing. "The Group is exploring smart home, smart
office, smart healthcare and other areas and leveraging
artificial intelligence ... and other new technologies."
Lenovo said its global PC shipments declined 3
percent in the first half against a market decline of 4
percent.
Lenovo is in talks with Japan's Fujitsu Ltd to explore
strategic cooperation regarding the latter's PC
business. A potential acquisition of Fujitsu's PC
business could help Lenovo consolidate its footing in
the global PC market and counter slower growth at
home in China, its biggest market, analysts said.
