Lenovo group has announced its financial results for its second fiscal quarter that ended on the 30th of September. The company managed to show profits despite what it calls a challenging time in the industry. Total revenue was US$11.2 billion, down eight percent year-over-year but up by 12 percent quarter-over-quarter.
The company managed to ship a total of 14 million phones in the quarter. This marks an increase of 25% from the first quarter of 2015. Gross profit for the second fiscal quarter increased two percent year-over-year to reach $1.6 billion. This marks a gross margin of 14.3 percent. On a per share basis, this quarter marks an increase of 1.42 US cents, or 11.01 HK cents.
Despite a decrease in Lenovo’s year-over-year revenue, the company on the whole, appears to be pleased with the results. And it is also laying more stress upon what is visible from a quarter-wise perspective. Pre-tax income for the second quarter for Lenovo stood at US$168 million — which is all the more impressive when you consider it with respect to last year’s second quarter, when the company incurred a loss of $842 million. As far as net income was concerned, the company went up from a loss of $714 million in the second quarter last year, to US$157 million this year.
Speaking about his company’s performance, Yang Yuanqing, Chairman and CEO, Lenovo said,
Market conditions remained challenging but we delivered solid results. Our PCSD business maintained leadership and strong profitability, our Mobile business had good quarter-to-quarter volume growth and margin improvement, and our Data Center business is actively addressing its challenges. We have also added several of the industry’s top minds into Lenovo, and are continuing to strengthen our leadership team. We remain confident in our vision, our strategy and our team’s ability to achieve new heights.
The company also announced the joining of three new executive leaders. While Kirk Skaugen joined the company as its Executive Vice President (EVP) and President of Data Center Group (DCG), Laura Quatela is joining the company as Chief Legal Officer and SVP. Also coming on-board is Dr. Yong Rui, who is taking up the role of Chief Technology Officer and SVP.
While Kirk was previously Senior Vice President (SVP) of the Client Computing, Datacenter and Connected Systems groups for Intel, Laura was EVP Intellectual Property at Alcatel-Lucent and as President and General Counsel of Eastman Kodak. The company’s new CTO on the other hand, was previously Deputy Managing Director leading Microsoft Research Asia.
PC and Smart Devices Business Group
Lenovo’s PCs and tablet sale stood at $7.8 billion, marking a decrease of eight percent year-over-year. The company also managed to retain its number one worldwide market share position for the 14th consecutive quarter. Lenovo’s global market share stood at 21.5 percent market. On the basis of a global breakdown, Lenovo showed share gains in all geographies except the Asia Pacific.
While the tablet market that saw declines of 14.7 percent year-over-year, Lenovo performed slightly better than others in the niche.
Lenovo’s Mobile Business Group (MBG) shows growth
Lenovo’s mobile business group, which includes the company’s Motorola products and Lenovo-branded mobile phones. Sales for the second fiscal quarter stood at $2 billion. Again, while this denoted a decrease of 12 percent on a year-over-year basis, this also marks a significant 20 percent increase as compared to last quarter.
The MBG groups showed significant promise with regards to sale volume.
Shipments in MBG product lines in the second quarter grew almost 25 percent compared to the previous quarter to a total of 14 million. Lenovo continued to increase mobile shipments in both Asia Pacific and India, with mobile shipments in India increasing 15 percent year-over-year.
As far as the Motorola handsets were concerned, Lenovo said that shipments for smartphones were up by almost 40% following the launch of the Moto G4 and Moto Z handsets. The Moto Z series is said to have crossed the 1 million mark since its debut. The company is hoping to get the number up to 3 million in the first 12 months.
Finally, the company’s Data Center Group (DCG) which includes servers, storage, software and services, contributed to sales worth US$1.1 billion in the second fiscal quarter — an eight percent decrease year-over-year.
Geographically, China was the best region for the company and saw an increase in pre-tax income, which went up to $158 million year-over-year. Americas were also profitable, while sales in Europe, Middle East and Africa contributed to a pre-tax loss of US$65 million.