Thursday, Nov 12, 2015

Dubai: Lenovo reported a six per cent increase in second-quarter revenue of $3.2 billion from the Europe, Middle East and Africa (EMEA) regions, hit by foreign exchange moves and a soft PC market.

“Clearly we faced a tough environment, mainly driven by currency devaluation and, at the same time, due to the integration of Motorola Mobility and IBM x86 server acquisitions,” Eric Cador, President of Lenovo EMEA, said in a telephone interview.

The Chinese company acquired Motorola from Google for $2.9 billion and IBM’s low-end server business for $2.1 billion in October last year.

EMEA accounted for 26 per cent of Lenovo’s total worldwide sales. China, which used to bring in more revenue (about 30 per cent) for the company is slowing down.

This quarter, Americas contributed 30 per cent while China accounted for 28 per cent and Asia Pacific 16 per cent.

Despite the tough environment, Cador said that the group’s revenues climbed year-on-year 16 per cent.

Lenovo Group posted an operating loss of $784 million and incurred $599 million in restructuring costs and a $324 million one-time charge to clear smartphone inventory in second quarter.

Looking forward, he said that the PC segment will continue to be under pressure from the market standpoint but it will be better (still on the negative side). The phone business is doing well.

“Even though the market is growing at a few percentage points we grew 147 per cent in the region. We sold 3.8 million phones,” he said.

Lenovo global mobile volume was up 11 per cent year-over-year with 18.8 million units sold, led by growth outside of China where it saw a 4.3 point increase in market share year-over-year driven by a shift in strategic focus outside of China. In the first half of this fiscal year, outside China accounted for 70 per cent of volumes, while one year ago, it was only 19 per cent.

In enterprise sector, which includes servers, storage, software and services, Cador said that its revenue for the first time grew since its acquisition of IBM server business.

“We have been going down in revenues in the last two quarters due to the IBM x86 integration,” he said.

Cador sees the growth to come mainly from the mobile phone and server business.

Even with the PC market still on the negative side, he said that Lenovo’s intention is to grab 30 per cent of the market share as other vendors are also struggling.

Lenovo was No 2 in the regional PC market overall, growing market share to 19.9 per cent, up 0.6 per cent year-over-year. In consumer PCs, it was No 1 for the seventh consecutive quarter, clocking 21.5 per cent share.

In the global arena, Lenovo remained No 1 for the tenth consecutive quarter with record high 21.2 per cent market share, widening its lead over the No 2 vendor — HP. It shipped 15 million PCs in the quarter, with a 6.6 point premium to the overall market decline of 11.1 per cent.

By Naushad K Cherrayil Staff Reporter

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