China's Lenovo shrugs off concerns that global PC market is shrinking

Revenues for the world’s largest PC-maker Lenovo fell for a 3rd consecutive quarter as world demand for private computer systems proceed to stoop, however the firm shouldn’t be fearful, says CFO Wong Wai-Ming.

“We’re primary in PC. Clearly, when the market truly returns again to extra regular, we will certainly be rising,” Wong Wai-Ming, CFO of Lenovo, instructed CNBC.

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He added that the corporate is definitely seeing larger development in different companies corresponding to infrastructure options and companies.

In its newest earnings report on Wednesday, Lenovo mentioned it expects “the PC market will return to development” within the second half 2023.

The corporate posted a income decline within the January to March quarter. Income within the quarter amounted to $12.63 billion, down 24% from a 12 months in the past and marked the third consecutive quarter of year-on-year decline.

“Fiscal 12 months This autumn was essentially the most difficult quarter of the 12 months given pressures from each the PC market and the worldwide economic system,” mentioned Lenovo within the earnings report.

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However the CFO is optimistic that its non-PC companies — units, infrastructure options in addition to options & companies — might help diversify the enterprise.

“Our income on a full 12 months foundation in actual fact did not truly drop that a lot as a result of the opposite two enterprise teams have been driving vital development partially by the infrastructure enterprise. The margin has additionally been mitigated or compensated by our vital development in our companies enterprise,” mentioned Wong.

Lenovo’s non-PC companies grew 7% and now include practically 40% of whole income for the complete 12 months via March. The opposite 60% of income nonetheless comes from the PC enterprise.

“Our non-PC companies’ income combine elevated to almost 40%. Our clear technique is working, and our operation is resilient, even within the face of world uncertainties,” mentioned Yuanqing Yang, chairman and CEO of Lenovo Group throughout the earnings name. “Going ahead, we are going to proceed to put money into [research and development] to seize the following wave of development alternatives, so we’re nicely ready for the longer term.”

Pandemic increase

PC makers have been a beneficiary of a pandemic-led increase that noticed shoppers and corporations snap up laptops, tablets and notebooks to transition from working in workplace to distant work. However as staff returned to the workplace, PC shipments fell.

Worldwide shipments of desktops and laptops contracted about 30% to 56.9 million items within the first quarter of 2023 as in comparison with a 12 months in the past, based on IDC information.

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Lenovo’s units income declined 33% year-to-year within the first quarter.

However Wong is optimistic about synthetic intelligence driving the agency’s units enterprise. The acceleration of digitization, AI and chatbots “truly require units” to leverage them, Wong instructed CNBC.

“Finally we can have three main enterprise development driving the income somewhat than what we had up to now — simply having PC as our main driver. We are going to over time have three enterprise teams driving profitability,” mentioned Wong.

Lenovo’s shares have been down 1.8% in Thursday morning commerce.

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