Lenovo's emerging markets strategy paying off

Lenovo's fourth quarter was a mixed bag relative to expectations, but its strategy to protect its home turf---China---and mature markets such as the U.S. while attacking emerging markets appears to be working well.

Lenovo's fourth quarter was a mixed bag relative to expectations, but its strategy to protect its home turf---China---and mature markets such as the U.S. while attacking emerging markets appears to be working well.

The PC maker reported fourth quarter earnings of $42 million on sales of $4.88 billion. Wall Street was expecting revenue of $5.08 billion, according to Thomson Reuters. Barclays Capital was looking for $5 billion. Earnings appear to be better than expectations, but the estimates are all over the place.

For fiscal 2011, Lenovo doubled its profit to $273 million on revenue of $21.6 billion. Those results handily topped expectations.

In the big picture, Lenovo is outgrowing the overall PC market and has global market share of 10.2 percent. Shipments in the fourth quarter were up 16 percent largely due to a strong corporate upgrade cycle.

Among the key figures:

  • China revenue delivered fourth quarter revenue of $2.2 billion, up 12.3 percent from a year ago. China is 45 percent of Lenovo's sales volume.
  • Emerging market PC shipments were up 31.5 percent in the fourth quarter. Sales were $850 million in the fourth quarter. Russia and India saw the strongest growth rates at 88 percent and 58 percent, respectively.
  • Mature market fourth quarter sales were $1.8 billion, up 13.4 percent from a year ago. Lenovo said it weathered the natural disasters in Japan well with a slight decrease in shipments.
  • Laptops represented 61.3 percent of total sales. Desktop PC shipments were up 17.4 percent in the fourth quarter.
  • Lenovo Mobile had $187 million in fourth quarter sales. Lenovo's smartphones are focused on China and shipments were up 47.4 percent.
  • Going forward, Lenovo's plan is to grow its server and workstation sales in china, grow its mobile business and attract consumers and SMBs in emerging markets.