Lenovo posts 6% sales drop in first quarter

Lenovo TechWorld 2016
Lenovo is continuing to struggle as it posted 6 percent drop in revenue in its first fiscal quarter ended June 30, 2016.

Lenovo revenue was $10.1 billion. On quarter-to-quarter basis, Lenovo revenue rose 10 percent.

Net income of Lenovo increased 64 percent year-over-year to $173 million.

China $2.9 billion (–9.8 percent)
Asia Pacific $1.7 billion
EMEA $2.5 billion (–7.3 percent)
Americas $3 billion (–6.6 percent)

Lenovo says its first quarter revenue was negatively impacted by rough market conditions. PCs fell 4.1 percent and tablet shipments fell 11.1 percent, while server industry shipments were essentially flat with smartphone markets growing 0.7 percent.

“Though the macro-economy and industries remain challenging, causing a decline in our revenue, we significantly improved our profit year-on-year through innovative products and strong execution. Our PC business delivered strong profits and our smartphone business stabilized compared to last quarter,” said Yuanqing Yang, Chairman and CEO of Lenovo.

Lenovo will focus on high growth segments of the PC market and leverage consolidation to resume growth.

Lenovo will leverage innovative, differentiated products and continue to shift to higher price bands to drive growth and turn around this business.

Lenovo will expand in hyperconverged technology, and improve profitability in the hyperscale business.

Lenovo generated $7 billion (–7 percent) revenue from PC business. Lenovo shipped 13.2 million PCs in the quarter, a 2.3 percent decline. Lenovo said its tablet business was profitable with double-digit growth premium to market. Lenovo continues to make steady progress towards its goal of achieving 30 percent worldwide PC market share.

Lenovo generated $1.7 billion (–6 percent) revenue mobile business.

Lenovo revenue from Data Center business was $1.1 billion (+1 percent). DCG’s global accounts sales group, which services Fortune 500 clients, saw 45 percent year-over-year increase in revenue, driven by a significant increase in customers who had not previously purchased from Lenovo.

Lenovo said its Data Center business will deploy investments in sales force capabilities, marketing, channel programs and partners to drive future growth opportunities, while improving its financial footing with cost competitiveness and an increased attach rate of storage, networking, services and options.