Lenovo's Q4 2017 Mostly Positive, Mobile Unit Still Struggling

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Lenovo improved its overall performance in the fourth quarter of the calendar year 2017 but its mobile business is still struggling, as revealed by the company‘s newly published consolidated financial report for the three-month period ending December 31st. Lenovo Group’s third fiscal quarter saw the conglomerate post $12.9 billion in revenue, 6.3 percent up year-on-year, which also represents a ten percent sequential increase. The pre-tax income over the period amounted to $150 million, growing annually by 50 percent and quadrupling Lenovo’s result from the previous quarter. While the firm said its mobile unit’s performance over the third fiscal quarter was “as expected,” Chief Executive Officer Yang Yuanqing said the original plan to have the business break even by March of 2018 likely won’t be realized, Reuters reports.

The Mobile Business Group recorded $2.1 billion in revenue over the fourth calendar quarter of 2017, five percentage points down year-on-year, though Lenovo is quick to point out that the turnover remained flat compared to the previous quarter. Industry analysts are unlikely to put significant weight to such a sequential comparison, especially as most other consumer electronics manufacturers experienced traditional sales boosts over the holiday period. While Lenovo’s smartphone brand doesn’t have a significant presence in the West where holiday sales increases are more pronounced, its subsidiary Motorola does, signaling that its smartphone operations are still on a decline. Latin America remained one of the mobile division’s most robust markets, having recorded a 37 percent revenue increase compared to the same quarter last year. Lenovo also boasted about “strong profitability” in the region but didn’t elaborate on the matter.

Going forward, the company is likely to continue its cost-cutting efforts and place a larger emphasis on Motorola’s Moto brand at a direct expense of its own handsets. To date, Motorola Mobility shipped five million Moto Z smartphones on an international level, with shipments in Western Europe experiencing a 23 percent annual increase over the last quarter. Global activation rates of Moto Mods were up 64 percent in the final calendar quarter of 2017 but the fact that Lenovo opted to share that metric instead of shipments or direct sales suggests many of its modular accessories that ended up in the hands of consumers in recent months were bundled with compatible smartphones and weren’t purchased individually.