Global PC market stabilising
Lenovo Group Ltd. posted better-than-expected revenue as the PC maker benefited from a stabilizing global personal computer market. Sales for the quarter climbed 5 percent to £11.8 billion, while analysts expected £11.3 billion. On Thursday, the company also announced it will buy Fujitsu Ltd.’s client computing division for at least 17.85 billion yen (£157 million).
Net income fell 11 percent to £139 million in the three months ended September, Beijing-based Lenovo said. That was boosted by accounting gains and compares with the £26 million average of analyst estimates. Lenovo is struggling to find growth in its key divisions of personal computers, smartphones and servers.
While it lost top spot in global PCs to HP Inc., the market is showing signs of stabilizing as Chief Executive Yang Yuanqing takes costs out of a mobile business that has made little progress since buying Motorola for £2.9 billion. “A healthier PC market may finally aid Lenovo’s platform almost as much as it has HP or Dell,” Anand Srinivasan and Wei Mok, analysts at Bloomberg Intelligence, said before the release. “The server and mobile platforms need structural fixes.” Shares of Lenovo fell 1.1 percent before the earnings were released.
The stock has dipped more than 3 percent this year. While the 2005 acquisition of International Business Machines Corp.’s PC division paid off by lifting Lenovo closer to the top of the market, deals in 2014 for IBM’s low-end server unit and Motorola haven’t gone as smoothly. It’s now re-enlisted the executive who steered the Motorola acquisition to run its Chinese PC arm to breathe new life into the business.
Chairman Yang Yuanqing is exploring ways to rejuvenate the PC business .
“The recovery in emerging market demand helped drive Lenovo’s shipments during the quarter,” said Chris Yim, an analyst for BOCOM International.