Consumer Tech News

Lenovo’s Q4 profit dips 41% and revenue jumps 4.9% as PC shipments show improvement

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Credits: Flickr

Lenovo, the world’s largest PC manufacturer, has today announced its fourth quarterly earnings and it is still quite the topsy-turvy ride for the Chinese company. Due to sluggish demand, it had witnessed a drop in sales and revenue for five straight quarters but it has made a scintillating return this quarter. The profits, however, were jammed in reverse gear and went in completely the opposite direction.

In the final quarter of the fiscal year 2016, the Chinese giant reported that its revenue figure reached a whopping $9.6 billion, an increase of 4.9 percent year-over-year. This was coupled with earnings of 97 cents per share in the fourth quarter, which is hugely down from earnings of $1.62 per share in the same quarter of the previous fiscal year. The net profit attributable to equity holders was $107 million, down 41 percent from $180 million last year.

As for the complete year, Lenovo’s revenue figures stood at $43 billion, down 4.2 percent year-over-year, which is due to the mild increase in the demand for PCs, laptops, and smartphones towards the end of the fourth quarter. The net income for the complete year was $535 million, a year-over-year increase of $660 million. The basic earnings per share for the year stood at $4.86 and said that it will award $2.63 as the dividend for its shareholders.

In addition, the PC and Smart Devices (PCSD) business group announced that quarterly sales were up 4.9 percent year-over-year to $6.7 billion along with shipments, which grew by 1 percent to 14.4 million — faster than the overall PC market. The Mobile Business Group (MBG), which includes Moto and Lenovo-branded smartphones, witnessed 19.7 percent and 17.4 percent increase in revenue and shipments over the previous quarter. The Data Center Group (DCG), which includes servers, storage, software and services was the only one which was down — sales 13.3% and revenue 10.6% in the fourth quarter.

Commenting on its financial report, Lenovo’s Chairman and CEO, Yang Yuanqing, said:

Despite challenging market conditions, Lenovo saw revenue resume to growth in the fourth quarter, after five quarters of decline. To drive further growth, we have clearly defined the three-wave strategy.

He further continues to mention that the first wave of their renewed strategy will maintain focus on its PC leadership to keep up the momentum and crown of being the biggest PC maker across the globe. The company has already debuted an aggressive push for a ‘new end-to-end ownership model’ to manage every different business. It has stated that each entity is spearheaded by strong new leaders who’re ready to experiment and innovate.

This will also involve investing in R&D for the development of new & innovative products that enable the Chinese giant to scale up operations while also contributing to the profitability. So, the primary focus will still center around growing its PC business, which, as seen above, has regained momentum in this quarter.

The second strategy of its three-pronged assault involves a focus on further inducing growth into its existing mobile and data center businesses. It presently operates both Lenovo, as well as Motorola brands, under its umbrella. The company also closely works with Google and was the first to debut an AR tech ‘Tango-powered’ smartphone in the market. And cloud is steadily becoming important to each tech giant and it drives the third wave.

Lenovo is planning to executive this strategy, which also includes a stern focus on ‘Device + Cloud’ and ‘Infrastructure + Cloud’ to achieve long-term, sustainable growth. This will involve the amalgamation of future technologies into its hardware devices to bring new opportunities to the surface.

IMG CREDITS: Flickr