Lenovo struggles in latest financial results, job cuts incoming

Lenovo has surprised tech analysts with underperforming results for the latest quarter.

Revenue for the first quarter of the financial year 2015/16 did increase to $10.7 billion (£6.85 billion), which was up 3 per cent compared to the previous year, but as the BBC – which spotted the results – reported, this was short of investor and analyst expectations.

It certainly pales compared to the previous quarter’s year-on-year increase in revenue, which was up a whopping 21 per cent (even though total revenue wasn’t much more at $11.3 billion, which is £7.2 billion).

Net profit dropped even further, down to $105 million (£65 million), a big year-on-year drop of 51 per cent.

The mobile division showed growth in developing nations, and in total shifted 16.2 million units, which was up 2.3 per cent on the previous year – but Lenovo noted that “tough competition” saw its smartphone market share drop by 0.5 per cent to 4.7 per cent.

There was brighter news on the PC front though, with an increase of its lead to a record high of 20.6 per cent market share worldwide. The company said its goal was to achieve a 30 per cent stranglehold on the PC market within three years.

Unfortunately, job cuts are on the way to try and improve the current overall balance sheet picture, and around 3,200 positions are going to be axed, which is around 10 per cent of the company’s nonmanufacturing employees across the globe.

Yuanqing Yang, Chairman and CEO of Lenovo, commented: "Last quarter, we faced perhaps the toughest market environment in recent years, but we still achieved solid results. Our PC business remained number 1 for the 9th straight quarter. In the smartphone business, our strategic shift from China to the rest of world has paid off. And our combined enterprise business achieved operational PTI for the third consecutive quarter.

"But to build long term, sustainable growth, we must take proactive and decisive actions in every part of the businesses. We will further integrate elements of the acquisitions with our legacy businesses in Mobile and Enterprise, while building the right business model and cost structure.

“We will reduce costs in our PC business and increase efficiency in order to leverage industry consolidation increase share and improve profitability. We will come through these efforts as a faster, stronger and better aligned global company."