Lenovo sees fourth-quarter results slip

Lenovo Wednesday reported lower fourth-quarter results, saying that divestments from non-core businesses and lower PC prices were to blame.

Lenovo Group, the world's third-largest PC vendor, reported Wednesday that its revenue and profit slipped during the fourth quarter of its financial year.

Lenovo's fourth-quarter profit totalled HK$166 million (AU$27.8 million), as of the last day of the period being reported), a drop of 12 percent compared to the same period last year. The company's revenue was also down, falling 6 percent to HK$4.7 billion. Lenovo's 2004/05 fiscal year ended on March 31.

Lenovo's fourth-quarter results do not include IBM's PC business. That acquisition was completed on May 1.

For the full fiscal year, Lenovo earned a profit of HK$1.1 billion on revenue of HK$22.6 billion. That represents a 6 percent rise in profit over the previous year, the company said. However, Lenovo's revenue was 3 percent lower than the previous year.

The drop in full-year revenue was due to divestment from non-core businesses, Lenovo said in a statement. The company did not elaborate.

In addition, falling prices for computers over the last year created a "challenge to profitability," Lenovo said. During that time, the average selling price of a computer fell 12 percent in China, from 6,066 renminbi (AU$954) to 5,341 renminbi, the company said.

Revenue from sales of consumer PCs remained strong for Lenovo during the fourth quarter, rising 18 percent compared to the same period last year, the company said. However, revenue from sales of corporate computers tumbled 12 percent. Sales of handheld devices, including mobile phones and PDAs (personal digital assistants), dropped 3 percent, it said.

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Sumner Lemon

IDG News Service
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