China's Lenovo battles PC slump, records record sales

The PC industry may be having a tough time, but Lenovo has managed to outshine rivals and record a 90 percent rise in quarterly profit.
Written by Charlie Osborne, Contributing Writer

Lenovo has released its financial results for the fourth fiscal quarter and full-year ending March, 2013.

The world's second largest PC maker posted full-year sales of $34 billion -- up 15 percent year-on-year -- as well as earnings of $635 million post-tax (up 34 percent year-on-year), despite "a challenging macro-economic environment and ongoing PC industry transformation."

In the fourth quarter, the Chinese PC maker recorded revenues of $7.8 billion, a four percent growth increase year-on-year. Lenovo posted gross profit of $963 million and net profit of $126.9 million, up from $66.8 million a year ago -- a 90 percent rise in quarterly profit which goes beyond analyst expectations of $108.1 million. Basic EPS equates to $1.22 per share.

Operating profit in Q4 was $169 million, up 67 percent year-on-year. Operating profit for the full fiscal year was $800 million, a 37 percent jump. As of March 31, Lenovo has net cash reserves of $3.1 billion.

For the 2012/13 fiscal year, PC shipments grew 10.2 percent year-on-year, in comparison to an overall industry decline of 8.1 percent, according to the Chinese firm. Overall, Lenovo said it shipped 52.4 million PCs worldiwide, and has now snagged global marketshare of 15.5 percent.

While many tech firms have tightened their belts in the face of economic fragility, Lenovo has spent heavily on acquisitions to try and bolster its positon in the PC market. The firm has bought firms including electronics maker CCE, Medion, and IBM's PC business in 2005. Lenovo plans to battle in order to keep its top spot in the PC business, but will also focus on smart devices including smartphones and tablets as well as enterprise hardware in the future.

Lenovo CEO Yang Yuanqing commented:

"Not only were we the fastest growing among all major PC players, with record market share, revenue and profitability, more importantly, our smartphone and tablet businesses saw dramatic growth.

In fact, smartphone shipments were 3.7 times greater than last year globally and we are now number two in the China smartphone market. This has laid a solid foundation for the successful transformation of Lenovo into a PC Plus leader. Going forward, we will focus our investments on the fast-growing tablet, smartphone and enterprise hardware areas, while working to enhance the profitability of our core PC business."

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