Lenovo Third Quarter Profits Plummet
Tech company Lenovo posted a drop in its third quarter profits as it faced "sizeable" challenges in its business lines of data centers, mobile devices and personal computers.
The Lenovo Group reported a six-percent decrease year-over-year on its quarterly revenue to $12.2 billion. Its third quarter pre-tax income was $101 million, which was a 68-percent drop year-over-year. The company's net income plummeted 67 percent year-over-year to $98 million.
Lenovo attributed the loss to the "sizeable challenges" the company faced in its three main lines of business: the data center, mobile devices and personal computers and smart devices that, according to analysts' reports, have continued to experience either slow growth or no growth at all during the quarter ending Dec. 31, 2016.
"Despite ongoing macro-economic uncertainties and the two new businesses still in transition, Lenovo delivered a solid performance last quarter," said Yang Yuanqing, Lenovo chairman and CEO.
Yuanqing said the company's PC business remains strong, while the mobile business has made steady progress.
The company head added their data center business now has a clear improvement plan in place.
"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," Yuanqing said.
Lenovo's gross profit for the third fiscal quarter has seen a 15-percent drop year-over-year to $1.6 billion, with gross margin at 13.1 percent.
The company posted a 64-percemt decrease year-over-year on its operating profit for the third quarter. Basic earnings per share for the quarter was 0.90 US cents, or 6.98 HK cents. Lenovo also reported a net cash of $155 million as of Dec. 31, 2016.
The tech company posted a two-percent increase year-over-year in its PC and Smart Devices Business Group (PCSD). For the quarter, the PCSD saw a 10.2-percent growth. Lenovo also saw strong growth in tablets, up ten percent year-over-year, outperforming the market by 29 points.