Lenovo targets gaming and detachables after making full-year loss, says Motorola merger ‘didn’t meet expectations’

Lenovo has posted its first full-year loss in six years, having made a loss of $128 million for its most recent financial year.

Revenues reached $44.9 billion – a drop of three per cent year-on-year.

Job cuts and restructuring saw the PC giant make savings of $690 million in the second half of the year, plus Lenovo also announced a rebranding and new business strategy last summer. 

Despite that, its global PC market share for the year rose to 21 per cent, and Lenovo reported record market share in tablets, ranking third with nearly 11 million units shipped in the year. Lenovo also shipped 12.1 million PCs in Q4. 

Enterprise also saw 73 per cent year-on-year annual revenue growth.

Going forwards, Lenovo says it will ‘attack new growth areas – such as gaming and detachables – in the expanded PC market’ and ‘continue to take advantage of consolidation to strengthen revenue performance’.

However, the vendor added that results in its mobile business group (which includes products from the Motorola investment) ‘show integration efforts did not meet expectations’. 

Sales of Motorola devices, Lenovo-branded mobile phones, Android tablets and smart TVs reached $1.7 billion. But China shipments declined 85 per cent ‘as the business shifted focus to open market and higher price bands and product transition in North America was not successful’.

"Lenovo has learned a great deal since the close of the Motorola acquisition and is applying learnings quickly, with actions in organisation, leadership and approach," the firm said in a statement. "The two new co-presidents focused on China and the rest of the world now have the right focus.

"China is still the most competitive market and Lenovo intends to return to growth there by continuing to drive the shift from carriers to open market."

Lenovo says its overall revenue in EMEA during the fourth fiscal quarter was ‘constrained by the falling PC market’. Revenue was $2.5 billion, while margin was 0.2 percent. EMEA accounted for 27 percent of Lenovo’s worldwide revenue.

“Last quarter, despite challenging economic and industry conditions that hurt our top line, the decisive actions we took mid-year allowed us to protect our profitability," said Yang Yuanqing, Lenovo Chairman and CEO.

"We kept our core PC business strong, continuously improved profitability in enterprise and saw positive momentum in some key smartphone markets.

"Facing the operational issues in the businesses, we have already taken a number of proactive actions, including making key decisions in organization, leadership, products and channels to get back to growth in mobile, and adopting a new multi-business operating system to unleash the productivity and creativity of each business.

"At the same time, we will integrate our traditional strength in end-user devices with our new capabilities in cloud and infrastructure to attack the balanced device and cloud opportunities.”

Elsewhere, Lenovo’s major rival HP posted a drop in revenues for its fiscal Q2 to $11.5 billion, while net earnings fell from $1 billion to $629 million year-on-year.

Personal Systems net revenue was down 10 per cent year-on-year, while print net revenue fell 16 per cent.

"This quarter we delivered strong results and solid progress towards our long term strategy," said Dion Weisler, HP’s President and CEO. "We achieved our operational objectives, unleashed truly amazing innovations, and grew in strategic areas of our business, despite tough market conditions. I’m confident in our ability to execute and remain committed to our plan for growth."

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