Lenovo's profit hit by acquisitions of Motorola, IBM server business

The Chinese PC vendor is pulling more revenue from smartphones, tablets and servers

In the U.S., you won't find one single Lenovo store. But walk around anywhere in China, and chances are you'll come across one of its 18,000 retail outlets in the country. The company's presence can especially be felt in Beijing, where Lenovo shops and company advertisements can be easily found across the city.

In the U.S., you won't find one single Lenovo store. But walk around anywhere in China, and chances are you'll come across one of its 18,000 retail outlets in the country. The company's presence can especially be felt in Beijing, where Lenovo shops and company advertisements can be easily found ...

Lenovo's recent acquisitions have taken a bite out of the company's earnings, with its net profit in the first quarter dropping 37 per cent despite strong PC sales.

The Chinese company paid $US2.9 billion for Motorola Mobility and $US2.1 billion for IBM's x86 server business. Prior to the acquisitions, Lenovo typically reported strong earnings on continued PC demand in its home market.

The impact of the acquisitions was not unexpected. The Chinese PC maker has said its net profit will fall in the short-term, following the acquisitions last year.

During the quarter, Lenovo's net profit was $US100 million, down from $US158 million a year ago. Revenue, however, hit $US11.3 billion, up 21 per cent year over year, the company reported.

To fuel its future growth, the company has been expanding into mobile devices and the enterprise sector. Its purchase of Motorola Mobility, for example, will give Lenovo an instant foothold in smartphone markets such as the U.S.

The Motorola purchase has made Lenovo the world's third largest smartphone vendor, behind Apple and Samsung, according to research firm IDC. But the company still faces the challenge of making its smartphone business profitable.

Its business in smartphones, tablets, servers and other products now accounts for 37 percent of its revenue, the company said in its earnings statement. That figure is up from 17 percent points a year ago.

PCs, however, still remain the company's main business. It ranks as the world's largest PC vendor. During the fiscal year ended March 31, Lenovo shipped 60 million PCs, a new record for the company, and it has been steadily growing its market share in the US.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags business issuesconsumer electronicssmartphoneshardware systemsAndroiddesktop pcsLenovolaptopsfinancial results

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

Michael Kan

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?