Lenovo Q2 2018: Revenues surge, Motorola breaks even

Lenovo's results are strong, buoyed by the break-even of Motorola worldwide.
Written by Charlie Osborne, Contributing Writer

Lenovo has reported strong Q2 2018 earnings on the back of PC, smartphone, and tablet sales.

On Thursday, the Hong Kong-based company announced its financial results for the second quarter ending September 30, 2018. (statement)

Group revenue reached $13.4 billion, up 14 percent year-over-year (18 percent at constant currencies), which is the highest quarterly revenue report for close to four years.

Profit attributable to shareholders increased to $168 million. Lenovo reported basic earnings per share of $1.14, or 11.06 HK cents, leading to the distribution of an interim dividend of 6.0 HK cents per share.

Pre-tax income was reported at $213 million.

Lenovo says that this is the third straight quarter in which the company has reported double-digit growth, year-over-year.

The tech giant has spent the quarter restructuring its business and pushing ahead with what the company calls "Intelligent Transformation," which involves cutting down on waste and improving efficiency through new technologies.

See also: Lenovo announces unmanned convenience store to test AI, facial recognition

These changes have been cited as a reason for the improvement in the Intelligent Devices Group, which has delivered revenue growth of 10 percent year-over-year, amounting to $11.84 billion in the second quarter.

Lenovo's PC and smart devices business, under IDG, reported revenue of $10.2 billion, up 18 percent year-over-year. In October, IDC's Worldwide Quarterly Personal Computing Device Tracker suggested that Lenovo holds the top spot in worldwide PC shipments with a market share of close to 24 percent, followed by HP and Dell.

Lenovo has contributed to these estimates by saying that the company also "continues to lead industry profitability at five percent."

Double-digit growth was reported in the Legion gaming, ThinkStation workstations, Yoga, ThinkPad, and IdeaPad categories.

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When it comes to the Mobile Business Group, under IDG, Lenovo's turnaround of the Motorola brand has contributed to a reduction in operational expense.

By "simplifying the product portfolio and focusing on core profitable markets," Motorola has, for the first time, broken even on a global scale, which has reduced operational expenses by a total of $175 million in comparison to Q2 2017.

In the US, shipments have increased by 53.4 percent year-over-year, and in China, sales have surged by 84.6 percent.

Lenovo's Data Center group has reported a fifth consecutive quarter of profit growth. In Q2, the unit reported revenue of $1.5 billion, an increase of 58 percent in comparison to 2017.

Year-over-year profitability in all regions has improved, and Lenovo says that a number of new, key partnerships -- such as a deal inked with NetApp in September -- have improved coverage and profit opportunities over the course of the last year.

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"Today's results show that Lenovo's focus on Intelligent Transformation continues to successfully underpin our growth in both revenue and profitability," said Yang Yuanqing, Lenovo Chairman and CEO. "I'm proud of how we are delivering on both our transformation strategy and our turnaround promise. There is no doubt that Lenovo is in a period of strong, sustainable growth and I am confident that our clear mission, strategy and execution capabilities will continue to drive even stronger results in coming quarters."

Innovation, IoT, and smart gadgets are also an area Lenovo is beginning to pursue in earnest. This week, Lenovo launched an unmanned convenience store in China as a testbed for trialing facial-recognition, e-payment, IoT, artificial intelligence (AI), and augmented reality (AR) technologies.


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