Lenovo returns to growth in Q2 with impressive strategy

Lenovo TechWorld 2016
Lenovo Group
has posted revenue of $11.8 billion (+5 percent) and profit of $139 (–11 percent) its second fiscal quarter ended September 30, 2017.

Lenovo achieved quarter-to-quarter revenue gain of 18 percent thanks to its super performance in three of its main businesses, namely data center, mobile, and PCs and smart devices.

Yang Yuanqing, chairman and CEO of Lenovo, said: “The combination of execution and building solid foundations continue to be Lenovo’s strength. The turnaround of our business in Brazil is a good example of that. We will continue to invest in building foundation and core competence for the two new growth engines, which will bring stable and sustainable returns.”

Lenovo  said its gross profit increased 0.3 percent to $1.6 billion with a gross margin of 13.7 percent. Operating profit increased by $94 million quarter-to-quarter.

Lenovo generated revenue of $8.4 billion (+7 percent) from PC and Smart Devices (PCSD) business group.

Lenovo said the average selling price for PCSD products was up six percent year-over-year, as Lenovo continued to focus on innovation, a higher-value product portfolio, and de-emphasize lower-value offerings.

Lenovo’s PC shipments were 14.5 million units, flat year-over-year, compared to a slight dip for the overall market. Lenovo’s tablet shipments were up 8.9 percent year-over-year to 2.97 million units, in a market that fell 9.4 percent.

Lenovo also celebrated the 25 anniversary of its iconic ThinkPad, with over 125 million units shipped since its introduction and still going strong with models such as the ThinkPad X1 Carbon.

Lenovo said its Data Center Group (DCG) — servers, storage, networking, software and services – achieved revenue growth in both the North America, and Europe/Middle East and Africa markets. DCG revenue in North America increased 10 percent.

Lenovo also saw improvement in China with 7 percent revenue increase quarter-to-quarter. While the last few quarters in China have been challenging, the improvements that have been put in place including new leadership and an expanded sales force, are helping to turn this business around there and drive new customer wins across hyperscale, big data, and private cloud.

Lenovo’s global accounts grew 18 percent year on year and services bookings grew over 100 percent year on year setting up a strong foundation for the future. Software Defined Infrastructure showed strong growth in the second quarter.

Lenovo’s Mobile Business Group (MBG), including Moto and Lenovo smartphones grew revenue slightly year-over year, and 19 percent quarter-to-quarter, driven by strong momentum for Moto smartphones.

Lenovo shipped 15.3 million smartphones, a 10 percent increase year-to-year and a 37 percent increase quarter-to-quarter.

Lenovo phone business achieved a growth of 71 percent in Western Europe, 69 percent in Latin America and 67 percent in North America. In Latin America, Lenovo achieved record market share of 17.7 percent, growing by 6.5 share points year-over-year. Lenovo India achieved a growth of 14 percent year-over-year and 83 percent quarter-to-quarter.

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