Lenovo revenue rose 5% despite drop in Data Center business

Lenovo Group said its revenue rose 5 percent to $12.51 billion during the first quarter ended June 30, 2019 – lifted by PC business.
Lenovo data center business revenue June 2019
Net profit of Lenovo doubled to $162 million in the quarter.

Lenovo revealed revenue details of its two important business units — Data Center Group and Intelligent Devices Group (IDG).

Lenovo’s Data Center Group revenue declined to $1.356 billion from $1.629 billion as a result of a small number of large cloud customers reducing their purchasing and a reduction in average unit revenue due to declining component prices.

Storage business revenue of Lenovo grew 81.9 percent. Software Defined Infrastructure (SDI) business of Lenovo achieved 18.5 percent growth.

Lenovo said it is the top HPC manufacturer globally. Lenovo’s HPC business is #1 in 20 markets as compared with Inspur, Sugon, HPE and Cray.

Lenovo provided outlook for the data center business saying it aims to grow at premium to market. DCG is well positioned as a full stack industry leader and will continue to drive SDI, storage and networking, service and solution led sales

Lenovo said it will strengthen in-house design and manufacturing capabilities; building to a profitable business model for Hyperscale. It aims to strengthen Smart Infrastructure business through partnerships with key industry players and telecom partners.

Revenue from Lenovo’s personal computer and smart devices group grew 11.7 percent to $9.6 billion, while its mobile business group recorded 9 percent drop in sales to $1.5 billion during the quarter.

The PC and Smart Devices Group (PCSD), a part of the Intelligent Devices Group (IDG), achieved 11.7 percent growth in revenue at $9.6 billion.

Lenovo’s PC and Smart Devices Group business generated 21.8 percent revenue from China, 26.8 percent from Asia Pacific, 26.7 percent from Americas and 24.7 percent from EMEA during the first quarter of fiscal 2019-20.

Americas and Asia Pacific achieved 20 percent and 40 percent year-on-year revenue growth respectively. All four geographies — Americas, Asia Pacific, China, EMEA — each delivered over $2 billion in revenue.

Lenovo’s PC volume grew by 18 percent. Lenovo has PC market share of 24.9 percent in the world. Lenovo’s PC business revenue increased 14.3 percent.

The global PC market rose 1.5 percent in the June quarter after falling for two consecutive quarters, as threats of increased U.S. tariffs on Chinese goods prompted some manufacturers to front load shipments.

However, the outlook for the industry remains uncertain after U.S. President Donald Trump said on Tuesday that he would postpone imposing an additional 10 percent tariff on Chinese-made products including tablets and laptop computers until December, but would impose the tariffs on desktops from September.

“There is a complexity of macro risks arising from ongoing trade negotiations, import tariff changes implemented by countries and challenges alongside geopolitical uncertainties,” Lenovo said in its earnings statement.

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