Lenovo weathers rough Q3, eyes enterprise, mobile growth

The Chinese company said revenue fell by 8% in the three months ending in December because of slowing demand for its smartphones and computers.

Its shares had fallen 10.19% at the close in Hong Kong, while the overall Hang Seng Index dropped 2.34%.

The world’s largest personal computer-maker Lenovo saw shares plunge by more than 10% after it reported that quarterly revenues fell for the first time in more than six years. The PC sales will continue to drop by around 3 percent in 2016, IDC or International Data Corp, a US-based research firm, predicted.

And softer phone sales were another factor which meant Lenovo only managed to rake in $12.9 billion total revenue (around £9 billion, or AU$18.3 billion). Yang said Lenovo’s strong intellectual property portfolio – thanks to the acquisition of Alphabet Inc’s Motorola handset unit – would give it an advantage when competing with Chinese smartphone vendors overseas.

Although Lenovo, just like everyone else in our industry, was impacted by global macroeconomic slowdown, currency fluctuations and PC market decline, and our revenue declined year on year, but our decisive actions we quickly took in the second quarter enabled us to beat expectations on profit.

In addition, Lenovo achieved 19.7% market share in the global consumer segment, while its business grew only by 1.7% in China, mainly due to persisting softness in China’s smartphone and PC market. That compared with analyst estimates for earnings to fall to $242.5 million.

Chief Executive Officer Yang Yuanqing has said the company will try to grab greater market share in the US and Europe this year, pivoting away from intensifying competition back home in China, where the economic growth is slowing. Its PC shipments fell 4.2 percent during the quarter versus 8.3 percent in the broader industry, with growth strong in North America, according to market researcher Gartner.

Focusing internationally helped Lenovo lift the proportion of smartphone shipments from outside China to 83 percent from 59 percent.

Lenovo’s Enterprise Business Group includes servers, storage, software and services sold under both the ThinkServer and System x brands. In case you haven’t heard, Lenovo will merge its smartphone brands and Motorola will soon become Lenovo Moto, joining the Lenovo Vibe brand.