​Lenovo stays positive despite 6 percent 1Q17 revenue decline

While revenue dropped to $10.1 billion for the first quarter of the 2017 financial year, Lenovo remained upbeat thanks to its 64 percent net income increase for the period.
Written by Aimee Chanthadavong, Contributor

Lenovo has published its first quarter results for the 2017 financial year, indicating that while it was impacted by year-over-year industry declines, it was able to improve its profit year-on-year through new products.

The company reported quarterly revenue was down 6 percent year on year to $10.1 billion, but net income for the period increased 64 percent year-on-year to $173 million. The decrease illustrated by the former was reflective of the company's individual business groups.

For instance, its PC and Smart Device Business Group, which includes PCs and tablets, was down 7 percent year-over-year to $7 billion, despite reporting the tablet business being profitable. Mobile Business Group quarterly sales dipped 6 percent to $1.7 billion, while the Datacentre Business Group reported a pretax income loss of $64 million, with Lenovo saying its DCG business continues to face "stiff challenges" in mature markets.
"Although the macro-economy and our industries remain challenging, causing a decline in our revenue, we significantly improved our profit year-on-year through innovative products and strong execution. Our PC business delivered strong profits and our smartphone business stabilised compared to last quarter," said Yuanqing Yang, Lenovo chairman and CEO.

From a geographic point of view, the Asia Pacific region was the only region to report positive results, achieving $1.7 billion in sales for the quarter -- 16.7 percent of Lenovo's worldwide sales. The company attributed the positive results to growth experienced across each business division, particularly its mobile business in India and Indonesia.

On the other hand, consolidated sales in the first quarter declined 9.8 percent year-over-year to $2.9 billion in China. Similar declines were also seen in Europe, Middle East, and Africa that dropped 7.3 percent year-over-year to $2.5 billion, driven by operational and macroeconomic challenges, especially in its datacentre business; and the Americas that slid 6.6 percent compared to last year to $3 billion in the first quarter.

Earlier this year, Lenovo ANZ managing director Matt Codrington told ZDNet that despite increasing competition, Lenovo is focused on making continued investments to grow its market share and position in the Australian market.

According to Codrington, while commercial devices are evolving to cater for the mobile workforce, the PC is still a "foundational" tool for the office and business, and that the PC market is still a $230 billion market.

Yang reiterated this strategy again during the first quarter announcement.

"Going forward, in PCs we will focus on high growth segments and leverage industry consolidation to resume growth. In smartphones, we will leverage innovative, differentiated products and continue to shift to higher price bands to drive growth and turn around this business. In datacentres, we will continue to expand in hyperconverged technology, and improve profitability in the hyperscale business," he said.

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