Weakness in core market to weigh on sales despite boost from Olympics
As one of the most visible sponsors of the Beijing Olympics, Lenovo Group may achieve greater global brand awareness for its computers but it will be challenged by a lingering weakness in its core mainland market, according to analysts.
The world's fourth-largest personal computer supplier, which will report fiscal first-quarter results on Thursday, 'faces some difficult times' despite its Olympics-related brand-building efforts, said analyst Charles Guo at JP Morgan in Hong Kong.
'I don't think [Lenovo's Olympics sponsorship] will have much of an impact in the near term because personal computer growth on the mainland, which accounts for 50 per cent of Lenovo's total shipments, is likely to remain weak in the quarter to September,' Mr Guo said.
He added that the economic slowdown in the United States also would prevent Lenovo from stepping up its expansion efforts in that key market.
Last month, Mr Guo cut his earnings estimate for Lenovo in the year to March by 4 per cent after estimating that personal-computer sales growth on the mainland slowed to about 15 per cent in the quarter to June from an average growth of 25 per cent in the past few quarters.
