Lenovo makes revenue of $10 bn as data center biz fails to impress

Lenovo TechWorld 2016Lenovo, which is following its 3-wave strategy for a complete business transformation, posted revenue of $10 billion, flat year-over-year, and a net loss of $72 million in its first fiscal quarter ended June 30, 2017.

Lenovo generated $7 billion (with flat growth) revenue from PC and Smart Devices (PCSD) business, $1.7 billion (+7.6 percent) from Mobile Business Group (MBG) and the balance $1.3 billion from Data Center Group (DCG) business.

Lenovo’s operating profit was up $110 million quarter-to-quarter. The company’s gross profit fell 11 percent year-over-year to $1.4 billion with gross margin at 13.6 percent.

Lenovo’s 3-wave strategy focuses on balancing PCSD growth and profit, accelerating DCG and MBG growth engines, and investing in non-hardware areas for positioning the company for longer-term profitable growth.

Lenovo is investing in core technology and next-generation platforms that will help customers move towards a smart internet era where all smart devices will be connected to the cloud and powered by Artificial Intelligence (AI).

“We have made progress on every front of our strategy. Particularly MBG continued to improve, and is on track to breakeven by second half of this fiscal year. DCG gained good momentum as well.  As the two new growth engines gain speed, we believe the sustainable results will soon follow,” said Yang Yuanqing, Lenovo Chairman and CEO.

Lenovo also announced a $1.2 billion investment in AI research and development at its third annual Tech World event, held last month in Shanghai.

Lenovo is pursuing smart solutions and partnerships in the manufacturing, healthcare and transportation sectors.

Lenovo’s PC business in the first quarter recorded share gains in Asia Pacific, Europe and Latin America, and worldwide shipped 12.4 million units.

Lenovo achieved its goal of selling three million Moto Z smartphones within the first 12 months.

Lenovo shipped 11 million smartphones in the first quarter. Lenovo grew 12.3 percent year-over-year outside of China, driven by significant gains in both Western Europe and Latin America, up 137 percent and 56 percent respectively year-over-year.

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