Original URL: http://www.theregister.co.uk/2006/08/04/lenovo_q1_2007_earnings/

Lenovo moves into the black

China rocks

By Drew Cullen

Posted in Financial News, 4th August 2006 14:48 GMT

Lenovo bounced back into the black in Q1 – just. But a slump in European sales took the shine off an otherwise reasonable quarter for the world's number three PC maker.

Lenovo turned over $3.5bn for the quarter ended 30 June, from which it squeezed a teeny net profit of $5m. Strip out restructuring charges, and pre-tax income was $34m. Last quarter the company lost $118m.

This time around, PC shipments climbed 12 per cent, against an industry average of nine per cent. But this masks markedly different performance in the main territories.

Sales rocked on its home turf (that's China, not America, which following last year's $1.25bn takeover of IBM's PC business is now Lenovo's second home). Shipments in the quarter grew 30 per cent, propelled by better geographic coverage and soaring notebook sales. Revenue in China was $1.3bn, or 39 per cent of group revenues.

In the more sedate markets of North America, shipments grew six per cent, in total generating $1bn revenues (29 per cent of revenue).

But EMEA (Europe, Middle East and Africa) is an altogether sorrier tale, with shipments falling 12 per cent to produce $662m, or 19 per cent of total revenue. It is unclear yet if this reflects market conditions, or if Lenovo is losing share in the area.

Lenovo is not alone in finding Europe tough: in recent weeks, the world's two biggest computer disties, Ingram Micro and Tech Data, have both complained of weak conditions in EMEA. ®

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