Lenovo announces record quarterly sales
PC business ‘outperforming industry as a whole’
Lenovo Group this week reported results for its second fiscal quarter ended September 30, 2012. The company announced record quarterly sales of $8.7bn, an 11% increase year-on-year. While growing faster than the top four PC companies for three straight years, Lenovo said it also had another quarter of record pre-tax income at $204m.
During the second fiscal quarter, Lenovo's worldwide PC shipments grew 10.3%, in a difficult market that was down 8% year-on-year, the fourteenth quarter in a row, according to Lenovo, that its growth was faster than the PC industry as a whole.
Lenovo achieved its highest-ever worldwide market share of 15.6%, according to IDC, gaining share points in every region and product category in which it competes, and in every respective customer segment.
In addition to its share gains, Lenovo turned in net income of $162m in the second quarter, an increase of 13% year-on-year, with gross margin at 12.1%. Gross profit for the second fiscal quarter increased 11% year-on-year, to $1.1bn, while operating profit for the second quarter was $206m, a 24% increase year-on-year.
Basic earnings per share for the second fiscal quarter was 1.58 US cents, or 12.25 HK cents. Net cash reserves as of September 30, 2012, totaled $3.6bn. Lenovo's board of directors declared an interim dividend of 4.5 HK cents per share.
As the PC Plus era continues to take shape, Lenovo made several moves during the second fiscal quarter to consolidate its position, announcing two acquisitions: Brazilian electronics company CCE, and Indiana-based software firm Stoneware, which focuses on cloud computing.
Both acquisitions came shortly after Lenovo's announcement of a global partnership with EMC, forming a server technology development programme that extended Lenovo's capabilities in x86 industry-standard servers. As part of this agreement, Lenovo will bring these servers to market on its own, and embed them in selected EMC storage systems over time.
Earlier this month Lenovo announced the formation of the Enterprise Product Group, a new business unit that will focus on expanding the company's server, storage, networking and software offerings geared towards a variety of commercial customers, including large enterprises, small/medium businesses and system integrators.
Also during the second quarter, Lenovo announced it was opening a manufacturing line in North Carolina, creating 115 new manufacturing jobs.
"With the strong execution of our ‘protect and attack' strategy, Lenovo has continued its strong and balanced growth momentum," said Yang Yuanqing, chairman and CEO of Lenovo.
"Our global PC market share reached another historic high, moving us closer to our dream of becoming the worldwide PC leader. With four years' effort, our Consumer PC business has become the world's number one in this segment for the first time. Our smartphone business in China, which we started only two years ago, has again strengthened its number two position.
"More importantly, we not only grew rapidly, but also improved our profitability consistently, with pre-tax income reaching a record high this quarter. As emerging markets outside of China and Mature Transactional business have entered the profitable growth stage, and as our smartphone and other MIDH [mobile internet/digital home] business continue to grow, Lenovo's overall profitability will continue to improve."