Lenovo said in August it would book around $900 million in restructuring and smartphone inventory clearing costs in the quarter amid the challenges of turning around its newly acquired smartphone and server businesses.
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Analysts had expected the firm to report a $803 million loss, according to Bloomberg News. With restructuring complete, Lenovo believes the MBG business turn around remains on track to reach its break even goal in one to two quarters.
“In key emerging markets of Indonesia, Russia, India and Brazil, Lenovo outgrew the smartphone market by 12, 175, 48 and 4 points, respectively”, it said. The company said it has sold 3.1 million tablets in Q2 2015. On a comparable basis, revenue rose 2 percent, the first growth since the acquisition. The enterprise division still had a pretax loss of Dollars 33 million. It talked up hyper-scale wins with Alibaba, Tecent and Baidu and the partnership with Nutanix. Expect to hear more from Lenovo in the coming months as it builds up to its first major round of new products in this area.
Lenovo generated $1.2 billion (+5.5 times) revenue from enterprise business. These declines were a result of performance in mobile as the market continued to see hyper competition, carrier subsidy cuts and continued shift to the online model. Worryingly both revenues and margins reduced though it blames much of that on the mobile market performance.
Operating expenses were up 116% to $2,359 million from Q2 2014’s $1,092 million. In Enterprise, Lenovo is leveraging channel expertise to accelerate the business. In Mobile, Lenovo had strong smartphone shipment growth of 135 percent year-over-year, driven by strong momentum in India and inclusion of Moto.
Its shares on the Hong Kong stock exchange closed 5.8% up at HK$7.7 (RM4.34) after the quarterly results were announced, while the benchmark Hang Seng Index finished the day 2.4% higher.
Lenovo are still China centric with 28% of its total sales from its home country (US$3.3 billion).
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“The China PC market is still very solid, this is our profit pool”, he said. In consumer PCs, it was number one for the seventh consecutive quarter, clocking 21.5 per cent share. This represented 30 percent of Lenovo’s total worldwide sales. The main reason for the big loss was restructuring costs related to the company’s purchase of IBM’s x86 server business and Motorola’s smartphone business from Google.
