P&L

Lenovo is betting big on smartphones, but its PC sales are still growing

February 13, 2014
February 13, 2014

Lenovo-net-income fixed

The numbers: Lenovo reported an impressive 31% jump in third-quarter profits to $265.3 million from $205 million a year earlier—well above average analyst expectations of $247.2 million. The Chinese firm warned that earnings in the immediate-term could be hurt by its pending purchases of Motorola’s smartphone unit and IBM’s low-end server business.

The takeaway: Even as demand for laptop and desktop computers has waned and other vendors are struggling, Lenovo is still growing its PC sales and adding to its market-leading share, with shipments up 6.6% in the last three months of 2013. Total company revenues, including mobile phones, tablets, and PCs, were up 15%.

What’s interesting: Lenovo knows that PC sales are unlikely to keep rising forever, which is why it’s betting so heavily on smartphones and tablets, along with enterprise and cloud services. Last year, Lenovo became the world’s fifth-biggest smartphone maker, and smartphone and tablet volume outpaced PCs for the first time. China accounted for 37% of total revenue, Europe, the Middle East and Africa together accounted for 27%, the Americas contributed 21% and the rest of Asia Pacific contributed 15%—a diverse global mix that should help the company as it branches out beyond the PC business that made it a household name.

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