Today Lenovo Group Ltd announced that it returned to profit in the third quarter of the year ending September 2016 (second fiscal quarter) contrary to analyst estimates, primarily thanks to gains originating from an asset sale. Lenovo remains the world’s largest PC vendor holding 21.3% market share and intends to maintain its spot in the lead through industry consolidation.
According to Lenovo, the number of PCs shipped in the first half of the year declined by 3% while the market has declined by 4%. The company’s Chairman and CEO Yang Yuanqing has communicated to the Hong Kong Stock Exchange that “in the short term, market conditions will remain challenging”, but the company intends to remain in the lead through industry consolidation and by expanding its mobile and data center businesses. Data shows that Lenovo’s profits reached $157 million in Q3 2016, representing a noteworthy leap forward compared to a year ago when the company registered a quarterly loss of $714 million, following restructuring and the acquisition of Motorola. However, while estimates of 14 analysts were lower than $157 million (at $131 million), it’s worth pointing out that the final Q3 fiscal results have been helped by a property disposal worth $206 million. Moving on, the report shows that in the first half of the year the company’s net profits were at $330 million whereas a year ago Lenovo registered losses of $609 million, and revenue fell 7% overall, down to $21.3 billion. Reportedly, revenue in the company’s PC and smart device business fell 8%, 10% in the mobile business, and 4% in its data center venture. CEO Yang Yuanqing continued to add that Lenovo “will develop new smart devices, powered by cloud and enriched with services. The group is exploring smart home, smart office, smart healthcare and other areas and leveraging artificial intelligence … and other new technologies.”
While the gap in the PC market between Lenovo’s leading position and Hewlett Packard’s 2nd place continues to narrow, it’s worth noting that Lenovo is also in talks with Fujitsu Ltd for a strategic cooperation in the PC business, which might lead to Lenovo acquiring Fujitsu’s PC arm in order to widen its presence in the global PC market, and to mitigate the slow growth in its home market, China.