Lenovo’s revenue fell for a fifth consecutive quarter as sales of two of its major lines of business – smartphones and servers – declined 20 percent or more.
The company, which ranks No. 1 in PCs worldwide, posted revenue of $12.2 billion in its fiscal third quarter that ended Dec. 31, down 6 percent. Still, revenue exceeded the $11.7 billion projected by analysts polled by Bloomberg News.
Net income dropped 67 percent to $98 million, well shy of the $145.9 million analysts were anticipating.
BOCOM International analyst Chris Yim told Bloomberg that Lenovo’s “net income should get better. The global PC market is stabilizing. That’s a good sign for them.”
Lenovo spent billions of dollars to beef up its smartphone and server business in 2014 – it acquired Motorola Mobility from Google and a line of servers from IBM – in order to diversify its business in the face of a weak PC market. But those moves haven’t paid off so far.
The company said in its earnings announcement that the industry-wide markets for each of its three core businesses experienced “either slow growth or no growth” during the quarter.
Lenovo is based in China but has a headquarters in Morrisville and employs more than 3,000 workers in the Triangle.
Revenue for PCs and tablets totaled $8.6 billion, up 2 percent from a year ago, bolstered by a 14 percent rise in PC shipments in North America. Market research firm IDC previously reported that Lenovo’s overall PC shipments outpaced the market and it retained its No. 1 ranking in the latest quarter, but rivals HP and Dell Technologies narrowed the gap by growing significantly faster.
Sales of the mobile business group, which includes Moto and Lenovo brand smartphones, fell 23 percent to $2.2 billion. Data center group sales, which encompasses servers and storage devices, fell 20 percent to $1.1 billion.
In a prepared statement, CEO Yang Yuanqing said of the mobile and data center businesses: “Although it takes time to build the core competence in these two new growth engines, we are confident to achieve breakeven and profitable growth in them.”