Chinese tech giant Lenovo faces ‘sizeable challenges’ as profits plunge

HONG KONG: Chinese technology giant Lenovo said it faced “sizeable challenges” on Thursday as it saw profits plunge by more than two thirds.
The Beijing-based company remains the world’s largest PC maker, but has been trying to broaden its smartphone business as the market for personal computers fizzles.
But it has struggled to keep pace with Apple and Android rivals.
Shares in Lenovo Group were down more than five per cent at HK$4.95 ($0.64) in early afternoon trading.
Net profits fell by 67 per cent year-on-year to US$98 million in the third quarter, the company said in a statement. That came in well short of analysts’ estimates by Bloomberg which on average predicted profits of $145.9million.
Revenues were also down six per cent compared with a year earlier.
“Lenovo faced sizeable challenges in its three main lines of business, namely data centre, mobile devices, and PCs and smart devices,” the firm said.
The company is battling as consumers opt for smartphones instead of PCs. Rising component prices are also weighing on profits.
Sales of the firm’s Moto and Lenovo branded phones slipped 23 per cent year-on-year in the three months to December.
Its data centre business, which includes servers, storage, software and services also took a 20 per cent dive in sales compared with the previous year. However, Lenovo’s PC and smart device business, which includes tablets, still saw sales gains of two per cent year on year.
That was spurred by strong growth in North America, the company said. — AFP