Lenovo experiences both turnover and profit drop

Chinese electronics manufacturer Lenovo‘s 2016 ended with a difficult quarter, where both its turnover and profit dropped despite an increased number of (tablet) computers sold.

Profit down two thirds

Lenovo is the world’s largest manufacturer of computers, but also active in the smartphone and data center business. Its quarterly turnover dropped 6 % to 12.2 billion dollars, about 11.5 billion euro. However, its profit got pummeled even harder, down 67 % from 300 million dollars to 98 million dollars (90 million euro).

Despite the worldwide computer market recession, Lenovo’s computer division managed to perform better than last year: in the last quarter of 2016, it sold 15.7 million computers and enjoyed a 10 % increase in tablet sales. All in all, the division posted an 8.6 billion dollar turnover, up 2 %. It now has a commanding 22.4 % market share in the global computer market.

Its smartphone division did not fare as well: a 25 % sales drop to 15 million devices and a 23 % turnover drop to 2.2 billion dollars. Motorola‘s smartphone division, acquired in 2014 and transformed into the Moto brand name, improved, selling 12 % more than the year before. Its own smartphones, for the Chinese market, performed remarkably weaker.

Its third division, called the Data Center Group (servers, storage, software and services), plummeted 20 % to a 1.1 billion dollar turnover, but CEO Yang Yuanqing is not dissatisfied: “Despite ongoing macro-economic uncertainties and the two new businesses still in transition (smartphones and Data Center Group), Lenovo delivered a solid performance last quarter.”