China / Business

Lenovo revenue declines on tumbling phone, PC sales

By Ma Si (China Daily) Updated: 2016-11-04 07:06

Lenovo Group Ltd saw an 8 percent decline in revenue in the quarter ended September, highlighting challenges the Chinese technology conglomerate faces as it works hard to revive tumbling smartphone sales and declining PC demand.

The Hong Kong-listed company said on Thursday that its net profit hit $157 million in the quarter, recovering from a $714 million loss in the same period last year, when Lenovo paid a one-off cost to integrate the mobile business of Motorola.

The return to profit was chiefly due to a $206 million gain from the sale of assets.

Yang Yuanqing, chairman of Lenovo, said in a statement that the firm's mobile business is moving in the right direction.

"Our smartphone sales volume grew by 25 percent in this quarter, compared with last quarter," Yang said, adding the firm now sells 60,000 units of the Moto Z, the firm's first modular handset, globally every week.

Lenovo, once one of the top four smartphone vendors in China, is struggling to integrate the Motorola handset business, which it bought from Google Inc for $2.8 billion in 2014.

Lenovo is ramping up its efforts, even at the expense of profits, to regain the share of the smartphone market it is losing to rivals such as Huawei Technologies Co Ltd and Oppo Electronics Corp.

The firm announced on Thursday Qiao Jian, Lenovo's senior vice president, will replace Chen Xudong to take charge of its China mobile business. Rui Yong, the former assistant managing director at Microsoft Research Asia, will become its chief technology officer.

Lenovo Group Ltd confirmed last week that it is in discussions with Japanese tech firm Fujitsu Ltd for cooperation in the personal computer business. Last month, Japanese media said the two firms were likely to set up a PC joint venture, with Lenovo accounting for a majority stake.

In the third quarter of this year, the Beijing-based firm maintained its top position as the world's largest PC maker, but its shipments declined 3.2 percent year-on-year.

In comparison, its biggest rivals Dell Inc and HP Inc grew by 6.2 percent and 3.3 percent respectively, data from International Data Corp show.

Isaiah Cheung, vice-president at Microsoft Greater China, told China Daily earlier that after four-years of consecutive decline, the global PC market is highly likely to revive growth in 2017, because consumers and corporate customers are attracted to the new generation of PC products, such as tablet-PC hybrids.

"Despite a continuing decline in the global market, Lenovo, in fact, is steadily recovering in its domestic PC business," said Zhao Xiaolei, an analyst at IDC.

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