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Lenovo Of China Reports The Worst Revenue Growth In Nine Quarters Due To The PC Slowdown

Lenovo Of China Reports The Worst Revenue Growth In Nine Quarters Due To The PC Slowdown
Lenovo Group of China reported its smallest revenue rise in nine quarters as the world's largest PC maker saw device sales slow after a pandemic-fueled surge, and it was also hampered by COVID-19 lockdowns at home.
The results validate Lenovo's strategy of focusing on non-PC sectors such as cellphones, servers, and information technology services, which now account for more than a third of its sales.
Lenovo's overall sales in the April-June quarter was $16.96 billion, up 0.2% from the same period a year ago, but in line with the $16.87 billion average Refinitiv estimate from seven analysts. The gain was the smallest since the March 2020 quarter.
For the quarter, net income attributable to shareholders increased 11% to $516 million.
Lenovo's slowing business growth coincided with the worldwide PC market cooling following a pandemic-fueled sales surge, prompting various companies ranging from chipmakers to electronics manufacturers to warn of a dramatic fall in demand, including Intel and Samsung.
According to research firm Counterpoint, global exports declined 11.1% year on year in the last quarter, the greatest year on year drop since the second quarter of 2013.
According to Counterpoint, Lenovo's total PC shipments declined 12.7% to 17.4 million units, owing primarily to sluggish consumer demand. However, the Chinese manufacturer retained its global PC market leadership with a 24.4% share. Lenovo did not provide shipment figures.
Furthermore, Chinese lockdowns during the quarter harmed the PC supply chain, with major laptop manufacturing partners such as Quanta (2382.TW), Compal, and Wistron experiencing severe manufacturing disruptions, according to a Counterpoint analysis.
Wai Ming Wong, the company's chief financial officer, stated during an earnings call that the company's device segment witnessed a 3 per cent fall in quarterly revenue due to "poor consumer PC demand and COVID-led supply restrictions."
However, he stated that revenue from non-PC device industries increased by 12 per cent. When compared to the same period last year, revenue from smartphone sales increased by more than 20 per cent.
Yang Yuanqing, Lenovo's chairman and CEO, told Reuters in an interview that he expected global PC shipments this year to range between 300 million and 310 million units. That would be a nearly 10 per cent decrease from the 341 million units supplied last year, according to research firm Canalys.
However, Yang stated that supply-chain issues that plagued many hardware makers early this year had eased.
"In some areas we are still facing a shortage, particularly in the data center business," he said, "But generally speaking, I'm not seeing significant challenges in the second half of this year."
He also stated that while the semiconductor market has witnessed some price rises, Lenovo will stay flexible in dealing with pricing variations around components.
Lenovo's Hong Kong Stock Exchange shares fell 0.71 per cent, while the Hang Seng index fell 2.32 per cent.

Christopher J. Mitchell

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