Lenovo profits return as restructuring pays off

Lenovo posted its first quarterly net profit in a year

Top Chinese PC maker Lenovo posted its first quarterly net profit in a year on Thursday, marking gains from a restructuring and strong sales in emerging markets.

But while Lenovo's PC shipments to consumers rose substantially in the quarter, commercial demand remained soft and may not fully pick up until a new wave of hardware spending in the second half of next year, company executives said in a call with reporters.

Lenovo posted a net profit of $53 million for the three months ended Sept. 30, more than double its net profit in the same quarter a year earlier. Lenovo had posted net losses for each of the previous three quarters. The company also reported sales for the most recent quarter of US$4.1 billion, slightly below $4.3 billion a year earlier.

"China's strong performance largely contributed to this turnaround," said Lenovo CEO Yang Yuanqing. Lenovo's unit shipments in China, which accounted for nearly half of its global sales, were 28 percent higher than one year earlier. By contrast, its shipments in mature markets were flat compared to a year earlier.

Cost-saving from Lenovo's major restructuring announced early this year also helped push it into the black, said Lenovo chief financial officer Wong Wai Ming. Lenovo announced nearly 3,000 lay-offs this year as it reshaped its business to focus more on China and other emerging markets. Those moves came after the global economic recession dealt a blow to Lenovo's PC sales in North America and Western Europe.

The release of Windows 7 last month is widely expected to spark a round of hardware replacement at big businesses in coming months. Lenovo's corporate customers have taken quickly to testing machines with the new operating system, which represents a "real opportunity" for Lenovo, company chief operating officer Rory Read said.

"We could see early activities as early as this quarter and we'll see that accelerate," Read said.

High prices for components such as LCD screens and memory are likely to keep pressure on Lenovo's margins through the holiday season, said Yang.

Join the PC World newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags pc shipmentsLenovo

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Owen Fletcher

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Matthew Stivala

HP OfficeJet 250 Mobile Printer

The HP OfficeJet 250 Mobile Printer is a great device that fits perfectly into my fast paced and mobile lifestyle. My first impression of the printer itself was how incredibly compact and sleek the device was.

Armand Abogado

HP OfficeJet 250 Mobile Printer

Wireless printing from my iPhone was also a handy feature, the whole experience was quick and seamless with no setup requirements - accessed through the default iOS printing menu options.

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?