Lenovo's data center ambitions remain work in progress following Q3 results

Lenovo's data center unit saw sales fall 20 percent in the fiscal third quarter from a year ago. Lenovo said it has a clear improvement plan in place and is investing in sales throughput.
Written by Larry Dignan, Contributor

Lenovo's data center group saw fiscal third quarter revenue fall 20 percent from a year ago and the company is investing in its sales, channel and product groups.

The company, which built its data center group largely be acquiring IBM's commodity server business, said third quarter sales were $1.1 billion, down 20 percent from a year ago. Lenovo said it saw quarter-over-quarter improvements in North America, Latin America and Europe, Middle East and Africa.

However, Lenovo said it needs to build its data center brand, which includes servers, storage, software and services. The company has forged partnership with key enterprise players such as SAP, but lacks the sales and channel infrastructure.

Lenovo added that it is "strengthening our sales teams, investing in the channel, revamping our product lines, building our brand strategy, and adding new partnerships." The company also added to its global accounts team that focuses on Fortune 500 companies.


Overall, Lenovo faced a challenging quarter as all units saw sales stagnate or slide. Lenovo reported operating income of $101 million in the third quarter on revenue of $12.2 billion, down 6 percent from a year ago. CEO Yang Yuanqing said "our PC business remains strong, our Mobile business has made steady progress, and our Data Center business now has a clear improvement plan in place." Yuanqing also noted that it takes time to build the latter two businesses.

The PC and smart devices unit delivered operating income of $431 million on revenue of $8.6 billion. Lenovo said demand in North America was strong as shipments jumped 14 percent from a year ago. Tablet shipments were up 10 percent.

Meanwhile, the mobile unit, which includes Moto and Lenovo smartphones, delivered sales of $2.2 billion, down 23 percent from a year ago. Lenovo shipped 15 million smartphones and said that Moto G shipments were up 12 percent from a year ago due to strength in Latin America and India.

Also: Lenovo enters smart glasses fray, targets business, augmented reality, June availability

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