Lenovo profit down again as high-end sales suffer

The results dragged the firm to an annual loss

Lenovo posted a greater quarterly net loss than in the previous three months as the world's fourth-biggest PC vendor began restructuring and continued to suffer from weak demand for high-end products.

Lenovo posted a net loss of US$264 million for the quarter through March, down from a net profit of $140 million a year earlier. Revenue was $2.8 billion, down from $3.7 billion the year before.

Sales held up best in China, where Lenovo has refocused under restructuring plans first announced in January, company CFO Wong Wai Ming told reporters.

That contrasted with a "substantial sales decline" in other markets, where all of Lenovo's operations recorded operating losses, Wong said.

The global economic downturn has bitten sharply into Lenovo's high-end sales in the West and India. Quarterly PC shipments to the Americas fell 19 per cent year-over-year, while shipments to the Asia Pacific plummeted 32 percent.

Lenovo also posted results for the full year through March. The firm's fourth-quarter losses dragged it to an annual net loss of US$226 million, down from a net profit of $484 million the year before. Sales were $14.9 billion, down from $16.4 billion.

Lenovo has split its product groups into high- and low-end lines as part of a low-price strategy to increase sales worldwide. That strategy has included releasing netbooks, but a weak Indian market during the quarter canceled out gains for new netbooks in Asia, Lenovo said.

Lenovo's results showed the deepening impact of the global economic downturn. Its quarterly losses more than doubled from the previous three months, and sales were down one-fifth.

"We expect emerging markets including China to continue to recover faster than the rest of the world," said Wong.

Netbooks will provide an important boost to sales, but Lenovo faces competing models from almost every other PC vendor, said Bryan Ma, an analyst at IDC.

Outside of China, Lenovo has been slow to cater products to consumer tastes, Ma said.

"One of Lenovo's weaker areas is on the consumer side, and today the market really is being saved by consumers, particularly with netbooks," said Ma.

Lenovo's fourth-quarter figures include $116 million in costs related to restructuring, which the firm expects to save it US$300 million in the next fiscal year.

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 profit

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

Tom Pope

Dynabook Portégé X30L-G

Ultimately this laptop has achieved everything I would hope for in a laptop for work, while fitting that into a form factor and weight that is remarkable.

Tom Sellers

MSI P65

This smart laptop was enjoyable to use and great to work on – creating content was super simple.

Lolita Wang

MSI GT76

It really doesn’t get more “gaming laptop” than this.

Jack Jeffries

MSI GS75

As the Maserati or BMW of laptops, it would fit perfectly in the hands of a professional needing firepower under the hood, sophistication and class on the surface, and gaming prowess (sports mode if you will) in between.

Taylor Carr

MSI PS63

The MSI PS63 is an amazing laptop and I would definitely consider buying one in the future.

Christopher Low

Brother RJ-4230B

This small mobile printer is exactly what I need for invoicing and other jobs such as sending fellow tradesman details or step-by-step instructions that I can easily print off from my phone or the Web.

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?