Lenovo surges back to the black

Higher PC shipments and a boost in market share help Lenovo grab a profit for the first quarter following last year's quarterly loss, while sales jump 50 percent.

Buoyed by double-digit gains in market share, Lenovo returned to profitability in the first fiscal quarter.

Earnings for the quarter ended June 30 climbed to $55 million, compared with a net loss of $16 million for the same quarter last year. Sales shot up almost 50 percent to $5.1 billion from $3.4 billion in the year-ago quarter.

The Hong Kong PC maker attributed the bump in quarterly results to its surging market share. For the third quarter in a row, Lenovo proved to be the fastest growing of the top five worldwide PC makers, helping it capture its first ever double-digit increase in market share. The company's PC shipments rose 48.1 percent over the prior year's quarter, compared with the overall industry average of 20.9 percent.

Based on shipments, Lenovo is currently the fourth biggest PC vendor in the world, following Hewlett-Packard, Dell, and Acer.

"Following our outstanding achievement of the past financial year, Lenovo achieved an excellent first fiscal quarter based upon our original projections," Lenovo Chairman Liu Chuanzhi said in a statement. "Our performance was strong globally, Lenovo has a clear strategy when and where to focus on gaining share, and when and where to focus on maximizing profit, and we executed that strategy well."

The company's robust laptop unit contributed 60.5 percent of overall global revenue. Sales in the division grew 50 percent, helping Lenovo move from sixth to fourth place among the world's leading laptop vendors. Laptop shipments were up 58 percent, compared with the industry average of 28 percent.

But the desktop division played a strong role as well by capturing a 35 percent gain in sales and accounting for 33.2 percent of Lenovo's overall revenue. Desktop shipments for the quarter climbed 36 percent, compared with the industry average of 13 percent.

Lenovo's mobile operations are also starting to make a dent. Launched during the first quarter, the company's LePhone smartphone is proving popular among customers and has seen encouraging initial sales so far, according to Lenovo. In a renewed push toward the mobile market, the company bought back its mobile phone unit late last year after having sold it in early 2008.

Moving forward, Lenovo said the first-quarter results hold promise for the year ahead.

All these indicators represent a good start to the new fiscal year," Lenovo CEO Yang Yuanqing said in a statement. "Looking ahead, we are confident that through the consistent strong execution of the strategies we have in place, together with continuing to drive our innovation, competitiveness, business model, and branding, we can continue to outgrow the market, and sustain our strong momentum."

About the author

Journalist, software trainer, and Web developer Lance Whitney writes columns and reviews for CNET, Computer Shopper, Microsoft TechNet, and other technology sites. His first book, "Windows 8 Five Minutes at a Time," was published by Wiley & Sons in November 2012.

 

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