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Lenovo expects better PC demand in second-half

By Wang Xing (China Daily)
Updated: 2010-02-05 10:21
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Lenovo expects better PC demand in second-half 

The Lenovo Group office in Shanghai. The PC maker said its third quarter revenue rose 33 percent to $4.78 billion. [Bloomberg News]

Personal computer maker Lenovo Group Ltd said yesterday that it expects a significant rebound in demand from business users in the second half of the year.

Yang Yuanqing, chief executive of the world's fourth largest PC maker, said corporate users will usher in a new wave of purchases in the second half of 2010, boosted by the better-than-estimated economic recovery and demand for computers using the latest Windows 7 operating system from Microsoft.

"We have already seen a rebound in the consumer market and expect the trend to continue in the business segment also," he said in an interview.

The company yesterday said its third quarter revenue rose 33 percent to $4.78 billion. Worldwide PC shipments during the October-December period increased 42 percent year-on-year, boosting its market share significantly.

Yang attributed the growth to Lenovo's strategy of aggressively expanding in emerging markets and cutting costs in mature markets.

The company's business in mature markets like the US and Europe fell sharply in the past few months as demand slumped.

Lenovo, which acquired IBM's PC unit in 2005, was severely hit last year by the global economic slowdown as corporate consumers reduced IT spending to save costs. Last year, the company axed 2,500 jobs overseas and revamped its business.

Yang said yesterday that Lenovo also plans to aggressively expand in the mobile Internet market after launching a netbook and a smart phone last month.

The company paid $200 million in November last year to buy back its mobile phone assets that it had sold earlier to focus on PCs.

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"Profits from our traditional business lines have been declining," said Liu Chuanzhi, chairman of Lenovo Group. He said the company would launch more innovative products in the future to maintain profit margins.

Lenovo's gross profit margin surged from 10.2 percent a year earlier to 11.1 percent in the third quarter.

Yang said that Lenovo's domestic business got a fillip recently after the government decided to remove price caps on computers in the rural subsidy plan.

Domestic business accounts for nearly 47 percent of the company's global sales.

The company plans to sell more mid- and high-end products in rural areas, where foreign rivals such as HP and Dell have a negligible presence, he said.

Lenovo's market share in China rose 2.8 percentage points in the third quarter to 33.5 percent.