Lenovo hires tech 'big brains' to turn around crappy sales

PC sales drop? Tick. Data centre down? Tick? Mobile? Of course

Profits down, image via Shutterstock

With sales shrinking in every corner of the portfolio and staff losing their jobs, Lenovo said Thursday it has hired some of the industry's "top minds" – presumably to help it figure a way out of its perfect storm.

The Chinese giant has reported an 8 per cent year-on-year drop in Q2 revenue to $11.2bn, though this was up 12 per cent on the previous quarter, which might be a small cause for some boardroom cheer.

"Market conditions remained challenging but we delivered solid results," said chairman and CEO Yang Yuanqing in a statement.

The PC and Smart Devices Business Group (PCSD) fell 8 per cent to $7.8bn, though divisional pre-tax income was up 3 per cent to $405m with better margins eked out in China and North America.

Things were even worse in the Mobile Business Group – where the redundancies are taking place – as sales slid 12 per cent to $2bn. The unit made a pre-tax loss of $156m, albeit better than the $217m lost a year ago when the company faced a series of restructuring and integration charges.

Sales in the Data Centre Group went backwards too, sliding 8 per cent year-on-year, but pockets of growth emerged in China and Latin America. A pre-tax loss of $141m was record, versus a loss of $33m in Q2 fiscal 2016.

Trading was down 4 per cent in China to $3.2bn; Asia Pacific fell by the same percentage to $2bn; EMEA slumped 14 per cent to $2.7bn; and the Americas dropped 7 per cent to $3.4bn.

The major cost cutting contributed to group profit, with operating profit of $215m a major improvement on the loss of $784m in the same period of the previous financial year. Net income was $157m versus a loss of $714m.

"Our PCSD business maintained leadership and strong profitability, our Mobility business had good quarter-to-quarter volume growth and margin improvement, and our Data Centre business is actively addressing its challenges," the chief exec claimed.

"We have also added several of the industry's top minds into Lenovo, and are continuing to strengthen our leadership team. We remain confident in our vision, our strategy and our team's ability to achieve new heights."

Former 16-year Intel veteran Kirk Skaugen – who ran the client computing, server and connected systems group at Chipzilla – has climbed on board as president of DCB. Ex-Alcatel Lucent exec Laura Quatela joined as senior veep and chief legal officer, and the one-time AI chief at Microsoft, Dr Yong Rui, has rocked up as CTO. ®

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