Lenovo revenue grew 8.5% to $14 bn in Q3 despite US-China tensions

Lenovo CEO Yuanqing Yang said Lenovo is well-prepared for geopolitical and economic volatility as its manufacturing facilities are spread across China, the United States, India, Brazil, Japan and Mexico, ensuring a stable supply. Lenovo event in 2016Lenovo, which purchased IBM’s personal computer and server businesses, relies on the Americas for 31 percent of its total revenue, versus 26 percent from China.

Lenovo Group announced revenue of $14 billion (+8.5 percent), pre-tax income of $350 million (+133 percent) and net profit of $233 million in its third fiscal quarter ended December 31, 2018.

Lenovo generated revenue of $12.4 billion (+6.2 percent) from the Intelligent Devices Group (IDG).

PC and Smart Devices (PCSD) business under IDG reported $10.7 billion (+11.6 percent) revenue. Lenovo PC revenue grew 16 percent. Lenovo has market share of 24.6 percent in PC sales.

The Mobile Business Group (MBG) under IDG posted its first profit since the Motorola acquisition in October 2014. Lenovo’s Data Center Group (DCG) reported its fifth consecutive quarter of profit growth on a 31 percent increase in revenue to $1.6 billion.

Lenovo said its share in the global PC market rose to 24.6 percent and that it expanded in premium markets such as workstations, thin and light PCs and gaming PCs.

Research firm Gartner said last month PC shipments fell 4.3 percent in the December quarter and 1.3 percent in 2018, but that the biggest three vendors – Lenovo, HP and Dell – expanded their market share in the quarter to 63 percent of total shipments from 59 percent.

Lenovo’s mobile phone business recorded a pre-tax profit – of $3 million, its first pre-tax profit since it bought Motorola’s mobile business in 2014 for $2.9 billion and struggled to integrate the assets. Lenovo’s mobile phone business revenue fell 20 percent, with Lenovo attributing the fall to a strategy of focusing on core markets

Yang said he expects the PC market to consolidate further and that Lenovo would leverage suitable opportunities. The group sees further growth potential in the China PC market, which still lags the U.S. industry in sales volume and revenue.

The loss in Lenovo’s data center business narrowed to $55 million from $86 million a year earlier, while revenue grew 31 percent. A new joint venture with U.S. cloud storage company NetApp would give a further boost to this segment, but declined to give a target date for breaking even.