Lenovo rises above worst slowdown in PC market

Mainland computer giant expected to unveil revenue up 5.3 per cent for first three months as the global computer market slumps 14 per cent

PUBLISHED : Tuesday, 21 May, 2013, 12:00am
UPDATED : Tuesday, 21 May, 2013, 4:03am

Lenovo is expected to report steady year-on-year earnings growth for its financial fourth quarter ended March 31, as the mainland technology giant defied the worst slump in global personal computer shipments during that period.

The computer maker, which will announce its latest financial year's earnings on Thursday, is forecast to post a net profit of US$102 million for the first three months of the year, up 52 per cent from US$67 million a year ago, according to Bernstein Research.

Revenue for the quarter was estimated to reach US$7.9 billion, up 5.3 per cent from US$7.5 billion the previous year.

Alberto Moel, a senior analyst at Bernstein Research, said yesterday that the projected gains were based on Lenovo's margin expansion, revenue growth in handsets and improving operating margins in emerging markets in the period.

The consensus market estimates for Lenovo last quarter were US$107.4 million in net profit and US$7.9 billion in revenue.

Lenovo, the world's second-largest supplier of personal computers, emerged unscathed after global personal computer shipments in the three months to March fell 14 per cent, marking the industry's worst quarterly decline.

Last month, technology research firms IDC and Gartner estimated that Lenovo shipped 11.7 million personal computers and seized a 15 per cent market share in the quarter to March, nearly closing the gap with the global leader, Hewlett-Packard.

Lenovo, which does business in more than 160 countries, saw shipments remain flat last quarter compared to a year ago. But it was the only one among the industry's biggest players that did not record a double-digit decrease in shipments in the period.

IDC said the extent of the year-on-year contraction last quarter was the worst since it began tracking the personal computer market quarterly in 1994. It estimated that worldwide shipments reached 76.3 million units during the quarter, while Gartner calculated 79.2 million.

Lenovo spokeswoman Angela Lee said the company "continues to outperform its traditional PC competition" and expected to take a greater share of the computer market.

Its performance was helped by the acquisition of Medion in Germany and its joint-venture investment with NEC in Japan.

Lee said that Lenovo, which bought the personal computer business of IBM in 2005, has widened its product portfolio to include smartphones and media tablets.

The company's smartphone business became profitable in the quarter to December on the back of strong sales on the mainland.

Its smartphones are now sold in Russia, Vietnam, the Philippines, Indonesia and India. The company's Think and Idea-brand tablets are already available worldwide.

Bernstein Research has estimated Lenovo's total revenue for the financial year to the end of March will reach US$33.9 billion, up from US$29.6 billion for the previous year.

Lenovo's share price rose 3.46 per cent yesterday to finish at HK$7.17, its highest close since reaching HK$7.53 on April 10.