Rising demand for PCs lifts Lenovo out of the red

Higher costs for memory chips and displays cut into the company's profit margin

PC maker Lenovo marked its return to profitability on Thursday but said higher component costs put a dent in results for its last fiscal year.

The Chinese PC maker reported a profit of US$129 million on revenue of $16.6 billion for the year to March 31. By comparison, the company reported a loss of $226 million on revenue of $14.9 billion during its previous fiscal year.

Lenovo said PC shipments rose 59 percent during its fiscal fourth quarter compared to the year earlier period. Speaking at a conference in Hong Kong to discuss the company's results, Lenovo CEO Yang Yuanqing called it "an ideal ending for the fiscal year."

"We have already achieved a complete turnaround," Yang said, crediting Lenovo's profitability to the restructuring of the company last year. As part of that restructuring, Yang replaced former CEO Bill Amelio and the company renewed its focus on China and other emerging markets.

Yang was generally upbeat that demand for PCs will remain strong. "The global economy is improving, but challenges remain," he said, noting the company is closely watching how the fiscal crisis in Greece affects the global economy.

While Lenovo highlighted strong unit shipment growth during the year, the company reported that its gross margin, a broad measure of profitability, slipped by 1.5 percentage points for the full year, dropping from 12.3 percent to 10.8 percent. Gross margin is the difference between revenue and the cost of goods sold, excluding operating expenses and other items such as taxes.

"This is largely due to high component prices," said Wong Wai Ming, Lenovo's chief financial officer, citing higher costs for memory chips and display panels, and a stronger U.S. dollar, as reasons for the company's lower gross margin.

"These factors will continue to be a challenge to improving our margin performance," he said.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags Lenovopc market

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

Sumner Lemon

IDG News Service
Show Comments

Father’s Day Gift Guide

Brand Post

PC World Evaluation Team Review - MSI GT75 TITAN

"I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it."

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?