Lenovo will focus on high growth segments of the PC market and leverage consolidation to resume growth.
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“The PC market performed slightly better than expected due to stronger performance in mature markets”, Yang said in a stock filing.
Lenovo has posted a 64 per cent year-on-year rise in first-quarter net profit, with chairman and CEO Yuanqing Yang pointing to “strong profits” delivered by its PC business. It faces a challenging outlook as the global market for personal computers continues to shrink and as growth in the China smartphone market slows. DCG’s global accounts sales group, which services Fortune 500 clients, saw 45 percent year-over-year increase in revenue, driven by a significant increase in customers who had not previously purchased from Lenovo. PC shipments fell 2 percent year-on-year, compared with a 4 percent decline in the broader industry. This represented 30.4 percent of Lenovo’s total worldwide sales. Lenovo said mobile sales were almost flat at constant exchange rates, as a higher average selling price offset reduced volumes.
In the Mobile Business Group, or MBG, which includes products from Motorola and Lenovo-branded mobile phones, Lenovo quarterly sales were US$1.7 billion, down 6 percent year-over-year, but almost flat in constant currency.
Analysts at Thomson Reuters had forecast $130 million in net revenue.
Overall sales had been forecast to be $9.63 billion.
Lenovo had an “urgent need to formulate a sustainable strategy in smartphones, particularly in China”, Jefferies analyst Ken Hui wrote in a note prior to the results, citing competition from domestic rivals with extensive sales networks in China such as Huawei Technologies Co Ltd.
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However, Bloomberg news quoted another analyst who was more positive. The company said bottom-line earnings amounted to $173 million (153 million euros).
