The world’s largest maker of PCs says total revenue during the July-September quarter is down 4% on the same quarter a year ago
03 November 2022 - 12:16
byJosh Ye
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Hong Kong — China’s Lenovo reported its first revenue decline in 10 quarters as a pandemic-fuelled computer sales boom came to an end, with sales especially falling in China as Covid-19 lockdowns took a toll.
The world’s largest maker of personal computers said on Thursday total revenue during the July-September quarter was $17.09bn, down 4% from the same quarter a year ago, but above an average Refinitiv estimate of $16.74bn drawn from seven analysts. That was the first decline since the March 2020 quarter.
Lenovo had already seen growth for its first-quarter revenue grind to a halt, at only 0.2%. Together with its second-quarter result, the company reported a 2% decline for its fiscal first half.
Lenovo’s struggles reflect a weakening market for PCs internationally. Global PC shipments declined 15% year on year in the third quarter, according to a report published by data firm IDC last month.
But the company continues its trajectory towards better profit as it expands its non-PC business. Net income attributable to shareholders for the quarter rose 6% to $541m.
Lenovo has been hit particularly hard in China due to the country's Covid-19 containment measures, the company said. Revenue from China fell 12% from the same quarter in 2021.
Yang Yuanqing, Lenovo’s chair and CEO, told Reuters in an interview that the revenue decline in China was due to weakening demand from commercial clients rather than consumers, unlike in many other markets around the world where consumer demand is being dampened by rising inflation.
“In China, consumer is better than commercial,” he said, “Actually in the rest of world, it’s the reverse (where) the consumer is impacted by inflation.”
But Yang said that Lenovo's factories in China had not been affected by the country’s battle with Covid-19.
“Most factories are still operating very well,” he said.
The IDC report showed that Lenovo, HP, and Dell saw year-over-year shipments fall by 16%, 28% and 21%, respectively. The Chinese company maintained its leadership in the global PC market with a 22.7% share. Lenovo did not give shipment numbers.
Chipmaker Qualcomm expects a slump in sales as its forecast for holiday-quarter revenue fell about $2bn short of Wall Street estimates.
Lenovo has been working over the past several quarters to improve its non-PC businesses such as smartphones, servers and information technology services, which together now make up about 37% of its revenue.
Yang said he expected the non-PC business would account for more than half of the company's revenue in the future.
When asked about recent US government export controls on semiconductors to China, Yang said it will have a limited impact on Lenovo's business.
“It will have an impact only on the high-performance computers. But that business accounts for a very tiny portion of our total revenue,” he said.
On semiconductor supply, Yang said that the company is seeing a normal supply of chips for PCs and smartphones but shortages persist for its infrastructure business.
In a later call with media, Yang said rising inflation around the world is softening demand for Lenovo's devices, particularly in mature markets like the US and Europe.
Wong Wai Ming, Lenovo's CFO, said the company’s quarterly earnings have also been impacted by the strengthening dollar as a lot of Lenovo’s revenue is received in other currencies.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Computer sales bubble bursts for Lenovo
The world’s largest maker of PCs says total revenue during the July-September quarter is down 4% on the same quarter a year ago
Hong Kong — China’s Lenovo reported its first revenue decline in 10 quarters as a pandemic-fuelled computer sales boom came to an end, with sales especially falling in China as Covid-19 lockdowns took a toll.
The world’s largest maker of personal computers said on Thursday total revenue during the July-September quarter was $17.09bn, down 4% from the same quarter a year ago, but above an average Refinitiv estimate of $16.74bn drawn from seven analysts. That was the first decline since the March 2020 quarter.
Lenovo had already seen growth for its first-quarter revenue grind to a halt, at only 0.2%. Together with its second-quarter result, the company reported a 2% decline for its fiscal first half.
Lenovo’s struggles reflect a weakening market for PCs internationally. Global PC shipments declined 15% year on year in the third quarter, according to a report published by data firm IDC last month.
But the company continues its trajectory towards better profit as it expands its non-PC business. Net income attributable to shareholders for the quarter rose 6% to $541m.
Lenovo has been hit particularly hard in China due to the country's Covid-19 containment measures, the company said. Revenue from China fell 12% from the same quarter in 2021.
Yang Yuanqing, Lenovo’s chair and CEO, told Reuters in an interview that the revenue decline in China was due to weakening demand from commercial clients rather than consumers, unlike in many other markets around the world where consumer demand is being dampened by rising inflation.
“In China, consumer is better than commercial,” he said, “Actually in the rest of world, it’s the reverse (where) the consumer is impacted by inflation.”
But Yang said that Lenovo's factories in China had not been affected by the country’s battle with Covid-19.
“Most factories are still operating very well,” he said.
The IDC report showed that Lenovo, HP, and Dell saw year-over-year shipments fall by 16%, 28% and 21%, respectively. The Chinese company maintained its leadership in the global PC market with a 22.7% share. Lenovo did not give shipment numbers.
Chipmaker Qualcomm expects a slump in sales as its forecast for holiday-quarter revenue fell about $2bn short of Wall Street estimates.
Lenovo has been working over the past several quarters to improve its non-PC businesses such as smartphones, servers and information technology services, which together now make up about 37% of its revenue.
Yang said he expected the non-PC business would account for more than half of the company's revenue in the future.
When asked about recent US government export controls on semiconductors to China, Yang said it will have a limited impact on Lenovo's business.
“It will have an impact only on the high-performance computers. But that business accounts for a very tiny portion of our total revenue,” he said.
On semiconductor supply, Yang said that the company is seeing a normal supply of chips for PCs and smartphones but shortages persist for its infrastructure business.
In a later call with media, Yang said rising inflation around the world is softening demand for Lenovo's devices, particularly in mature markets like the US and Europe.
Wong Wai Ming, Lenovo's CFO, said the company’s quarterly earnings have also been impacted by the strengthening dollar as a lot of Lenovo’s revenue is received in other currencies.
Reuters
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