Lenovo earnings dinged by weak enterprise demand

The PC maker has been restructuring to cut costs but remains a tale of two companies--it leads in China even as it struggles in mature markets.

This was originally published at ZDNet's Between the Lines.

Lenovo reported a net loss for its fiscal first quarter as revenue skidded 18 percent because of weak enterprise spending.

The company reported a net loss of $16 million, or 18 cents a share, in the first quarter, on revenue of $3.5 billion. Lenovo, which remains tethered to the commercial market, has been restructuring to cut costs. In addition, Lenovo remains a tale of two companies. The company leads in China and is extending PCs to the countryside and leveraging 3G mobile adoption. However, Lenovo has struggled in mature markets such as the U.S. and Europe.

Larry Dignan/ZDNet

Lenovo CEO Yang Yuanqing said the plan is to "continue to extend our leadership in China, strive to restore profitability in mature markets, and also seize opportunities in emerging markets and the transactional space."

As for the outlook, Lenovo said that it expects enterprise spending to remain weak in its second fiscal quarter, but will continue to cut costs to restore profitability.

Larry Dignan/ZDNet

By the numbers:

• Sales in China in the fiscal first quarter, which ended June 30, were $1.7 billion, or 48 percent of the total. Lenovo has a 28.6 percent market share in China.

• Mature market sales were $1.3 billion, 38 percent of the total in the first quarter.

• Emerging market sales were $474 million. Lenovo said it is targeting Latin America, Russia and Turkey as key countries. The company added that it needs to become more of a consumer player in these markets.

• Notebook computers are 64 percent of Lenovo's sales.

About the author

    Larry Dignan is editor in chief of ZDNet and editorial director of CNET's TechRepublic. He has covered the technology and financial-services industries since 1995.

     

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