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Lenovo Q3 Result: $714 Million Net Loss Due To Restructuring

November 12, 2015 - Written By Kishalaya Kundu

Chinese technology giant Lenovo on Wednesday, reported its results for the quarter ended September 30, 2015. The company reported a net loss of $714 million and a pre-tax loss of $842 million on revenues of US$12.2 billion, which is a 16 percent increase on a year-on-year basis, up from $10.4 billion from the same period last year. The loss is primarily due to “restructuring costs, one-time charges and M&A-related accounting charges” according to a statement from the company. The operating profits without the one-time charges however, came in at $166 million, which is a still a decline from the $262 million profit the company made in Q3, 2014, but still a 16 percent increase on a QoQ basis over the quarter ended June, 2015.

According to a statement issued by the company, “Lenovo is successfully executing its business realignment plan. As announced in Q1 earnings report, Lenovo incurred $599 million in restructuring costs and a $324 million one-time charge to clear smartphone inventory in Q2”. According to the company’s Chairman and CEO Mr. Yuanqing Yang, the growth in the company’s PC business and its strategy of stressing on global markets for its smartphone business has paid off big time, and the company has gained market share in both the sectors. As for its PC business, the company says it now has its highest share of the global market in the company’s history, and as for its smartphone biz, the company has reported improved market share and margin, leading to the increased revenue. According to him, “With strong execution Lenovo acted swiftly and decisively to address challenges, while still delivering better than previous quarter results. The realignment of our organization and the restructuring of our cost structure will deliver results in the 2nd half of the year”.

The company has also reported significant growth of its business in emerging markets, especially in India. The company sold 18.8 million smartphones and 3.1 million tablets globally during the quarter, with emerging markets being one of the prominent factors contributing to its growth. According to a statement from the company, “India grew 99% year-over-year, hitting an impressive record-high 27% share (in PC segment). In Mobile, Lenovo had strong smartphone shipment growth of 135% year-over-year, driven by strong momentum in India and inclusion of Moto”. The Mobile Business Group (MBG) of the company, which includes Lenovo and Motorola-branded Android smartphones, tablets and smart TVs, contributed $2.7 billion to the topline, thereby growing at an astronomical 104 percent YoY, primarily because of the inclusion of Motorola’s results.