Lenovo’s revenue fell once again in the face of a difficult market for PCs and tablets.
The China-based maker of electronic devices, which has a headquarters in Morriville, reported Thursday that its revenue fell eight percent to $11.2 billion in its fiscal second quarter that ended June 30. That exceeded the $11 billion in revenue anticipated by analysts polled by Bloomberg News.
Lenovo’s revenue has declined for four consecutive quarters.
CEO Yang Yuanqing told analysts during a conference call that “market conditions remained challenging. Both the PC and tablet markets declined year-over-year, while smartphones enjoyed only modest growth.”
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Although down year-over-year, Lenovo’s revenue was 12 percent higher than the preceding quarter.
Net income totaled $157 million in the latest quarter, bolstered by the sale of a research building in China that realized a $206 million gain.. A year ago the company posted a loss of $714 million.
Sales in the PC and smart devices business group, which also includes tablets, fell 8 percent to $7.8 billion.
Lenovo ranks No. 1 in PC sales but in the latest quarter, according to market research firm IDC, its 21.3 percent market share was just one-tenth of a percent ahead of HP – Lenovo’s smallest lead since it vaulted to the top in worldwide market share in 2013. Lenovo ranks third in PC sales in the U.S., where its shipments jumped 17 percent in the quarter.
Worldwide PC shipments fell 3.9 percent in the latest quarter.
Emilio Ghilardi, president of North American operations, said that the company posted a record North American market share of 15.4 percent in the quarter, up 2.1 percentage points from a year ago and up 1.1 percentage points from the immediately preceding quarter.
“We continue to march forward,” he said, noting that 18 months ago the company set for itself the goal of doubling its North American market share.
Ghilardi added that the latest results weren’t “just a market share play.” On the contrary, he said, the North American PC business also enjoyed record profitability, thanks in part to growing sales of products with a price tag of $700-plus, led by sales of ThinkPad brand devices to businesses and sales of Yoga hybrid laptops/tablets in the consumer arena.
Sales of the mobile business group that includes Motorola and Lenovo brand smartphones fell 12 percent to $2 billion, and the group posted a pre-tax loss of $156 million. Lenovo has been struggling to reverse Motorola’s losses since it acquired the business in 2014.
Yuanqing said the company was on track to turn around the Motorola business by mid-2017 after paring nearly $1 billion in costs through two restructurings – enabling the company to invest more in innovation and marketing.
He also said that Lenovo’s smartphone volume was up 25 percent year-over-year.
Last month Lenovo announced it was laying off “less than 2 percent” of its worldwide workforce of about 55,000 employees worldwide, with the majority of those cuts focused on the Motorola smartphone division in Chicago.
The company said it would lay off “less than 1 percent” of its Triangle workers. The company employes more than 3,000 workers in the Triangle and in Whitsett, N.C.
Data center group sales, which includes servers and storage devices, fell 8 percent to $1.1 billion.
Lenovo also announced several changes in top management, including a new executive vice president in charge of its data center group: Kirk Skaugen, who previsouly was senior vice president of client computing, datacenter and connected systems at Intel.
Skaugen succeeds Gerry Smith, who shifted to executive vice president and chief operating officer of PCs and smart devices. Skaugen will be based in Morrisville.
Lenovo is commemorating the addition of a new 40,000-square-foot building on its Morrisville campus with a ribbon-cutting ceremony Wednesday morning. Nearly 400 employees focused on North American sales work in the new building.