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Jeff Causey
Guest
Lenovo has released their second quarter financial results for the period that ended September 30th and although they experienced a loss, it was not as deep as had been estimated and expected. Lenovo says they were able to narrow the losses thanks to stronger than expected sales growth and improvements in their smartphone business. The net loss ended up being $714 million, beating the average loss of $803 million projected by analysts.
Looking at the Lenovo lines of business, the PC business continues to be profitable, but is slowing. That segment’s positive results are being offset by costs and results from the acquisition of server and smartphone units, including Motorola, last year. CEO Yank Yuanqing says Lenovo is shifting their focus away from China to other emerging markets due to the intense competition in China. With regard to Motorola specifically, Yang says the company is working to boost market share in mature markets like the U.S. and Europe.
According to Lenovo, the shift away from China when combined with additional cost cutting efforts, including job cuts, will help the company return Motorola to profitability within one to two more quarters of operations. Yang says he is confident Lenovo can also turn around the enterprise business purchased from IBM last year, reaching their target of $5 billion in annual sales within one year of the acquisition.
In terms of revenue, Lenovo saw sales in China fall by 12 percent when compared to the prior year. Despite that hit, revenues for the quarter still came in at $12.2 billion, which exceeded the $11.8 billion estimate. The improvements in sales and revenues have been offset by restructuring costs and impairments.
source: Bloomberg
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