Another Chinese thing you can see from space: Lenovo's sales
'Lenovo', or 'what we call PCs now'
PC maker Lenovo appears to drawing ever closer to its goal of seizing the global box-shifting crown from giant HP.
The Chinese dragon's momentum, built up over the last few years, shows no sign of slowing. The company had to sort out some small integration issues of swallowing IBM's PC business in 2004, but after six years of slog, more or less from 2010 onwards, it has been full steam ahead.
Revenues for Q4 ended 31 March were up four per cent to $7.83bn, down 16 per cent sequentially due to seasonality, as operating and net profits bounced 67 and 90 per cent to $169m and $127m respectively.
This gave Lenovo a net margin of 1.6 per cent, up from 0.9 per cent a year ago. This is a volume game, and the legions of buyers are not fanbois willing to dig deeper for kit.
In its homeland, sales were up eight per cent to $3.1bn. However, its Chinese PC operation, which is split out from the main business, saw sales tumble by $56m to $2.46bn.
In Asia Pacific and Latin America, turnover also fell $130m to $1.65bn but in EMEA and North America revenue climbed $104m and $134m to $1.85bn and $1.2bn respectively.
The results were filed hours after arch rival HP lifted the covers off another set of disappointing fiscal Q2 2013 numbers, specifically in its PC unit where sales dived 20 per cent to $7.58bn. This was led by a 21 per cent decline in notebooks and 19 per cent in desktops.
So HP CEO Meg Whitman and her cohorts may well have sought solace in a California bar as Lenovo was filing its financials at the Hong Kong stock exchange.
For the year, Lenovo's numbers, the top line ones anyway, looked even better. Turnover hit $33.8bn for the first time, up 15 per cent, as operating profit climbed 37 per cent to $800m, and net profit moved north by a third to $631m. The net margin was 1.9 per cent, up from 1.6 per cent in fiscal '12.
Over 52 million Lenovo PCs found a home in the year leaving it with a global market share of 15.3 per cent, up 2.1 points. Lenovo grew 14 points faster than a market which was in slowdown.
"Despite the challenging macro-economic environment and ongoing PC industry transformation, Lenovo delivered a strong performance," said chairman and CEO Yang Yuanqing.
However, the firm was not immune to the cannibalising impact of tabs on notebooks, with sales down two per cent in Q4 to $4.2bn. Tablet shipments were up a relatively modest 23 per cent but Lenovo didn't detail the exact shipments.
Desktop sales also decreased two per cent to $2.4bn but the smartphone line-up grew 206 per cent, including a 117 per cent hike in China where it held 13 per cent market share behind Samsung.
Lenovo execs said the plan is to improve profitability and continue to outpace the market in fiscal '14, and it wants to at least register in the server market, hence the talks with IBM, where it has struggled so far.
Overall, thanks to running ahead of predictions, Lenovo looks on course to become the biggest branded maker of PCs in 2013. It fits the profile - a high volume, low margin business that could be one of the last companies flying the flags for those commodity boxes. ®
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