China's Lenovo swings to
second-quarter profit on property sale
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[November 03, 2016]
By Sijia Jiang
KONG (Reuters) - China's Lenovo Group Ltd, the world's largest personal
computer (PC) manufacturer by shipments, on Thursday said it returned to
profit in its second fiscal quarter, beating analyst estimates, due
primarily to gains from an asset sale.
Growth in the consumer PC market in particular has been sluggish in
recent years as tablet computers and increasingly capable smartphones
Lenovo is the world's largest PC vendor with a 21.3 percent market
share, but its lead over second-ranked HP Inc <HPQ.N> has shrunk to the
narrowest margin since the Chinese firm took the top position in 2013,
showed data from researcher IDC.
"In the short term, market conditions will remain challenging," Chairman
and Chief Executive Yang Yuanqing said in a filing to the Hong Kong
Stock Exchange. Lenovo aims to maintain leadership in PCs through
industry consolidation while building on its mobile and data center
businesses, he said.
Profit reached $157 million for the three months ended Sept. 30, from
its worst-ever quarterly loss of $714 million in the same period a year
earlier when Lenovo booked one-off costs to restructure and integrate
the mobile business of Motorola.
The result, helped by a property disposal gain of $206 million, compared
with a Thomson Reuters SmartEstimate of $131 million drawn from the
estimates of 14 analysts.
Revenue fell 8 percent to $11.2 billion, versus the $11.02 billion
For the first half, net profit was $330 million versus a loss of $609
million a year earlier, while revenue fell 7 percent to $21.3 billion.
It said revenue fell 8 percent in its PC and smart device business, 10
percent in its mobile business and 4 percent in its data center.
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"The Group will develop new smart devices, powered by cloud and enriched
with services," Yang said in the filing. "The Group is exploring smart
home, smart office, smart healthcare and other areas and leveraging
artificial intelligence ... and other new technologies."
Lenovo said its global PC shipments declined 3 percent in the first half
against a market decline of 4 percent.
Lenovo is in talks with Japan's Fujitsu Ltd <6702.T> to explore
strategic cooperation regarding the latter's PC business. A potential
acquisition of Fujitsu's PC business could help Lenovo consolidate its
footing in the global PC market and counter slower growth at home in
China, its biggest market, analysts said.
(Reporting by Sijia Jiang; Editing by Christopher Cushing)
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