Lenovo posts another revenue decline as PC demand remains slow
Lenovo faces yet another quarterly revenue dip, with a 16% fall totaling $14.41 billion for the three months through September. The ongoing sluggishness in PC demand, exacerbated by excess inventory from the pandemic, continues to trouble the world's largest PC maker. Despite this, Lenovo's Chairman, Yang Yuanqing, is optimistic about a potential turnaround with the upcoming release of an "AI PC" designed to operate without internet reliance, providing enhanced user privacy.
Highlights:
- Lenovo's Q3 revenue drops by 16%, reaching $14.41 billion.
- Fifth consecutive quarterly sales decline as PC demand lags.
- Lenovo aims to revitalize sales with the launch of an innovative "AI PC" in the second half of next year.
Lenovo Group Ltd reported a 16% decline in quarterly revenue to $14.41 billion for the three months ending September, aligning with market forecasts. This marks the fifth consecutive quarter of reduced sales, attributed to the lingering effects of excess inventory accumulated during the COVID-19 pandemic. Despite a surge in electronics sales during the pandemic-induced remote work boom, the PC market has witnessed a contraction due to supply surpassing demand.
To counter this trend, Lenovo plans to introduce its first "AI PC" in the latter half of next year. This innovative device, capable of leveraging artificial intelligence without internet connectivity, aims to rejuvenate PC sales. Yang Yuanqing, Lenovo's Chairman, believes this novel category of PC will bring value to users while safeguarding privacy by eliminating the need for cloud data transmission.
In addition to its PC focus, Lenovo continues to diversify its portfolio, expanding into non-PC segments such as smartphones, servers, and IT services. During the first half of the fiscal year, revenue from Lenovo's digital solution service business surged by 14% to $3.6 billion, showcasing the company's commitment to enhancing profit margins beyond the PC domain. Despite these efforts, Lenovo reported a 60% decline in overall net income attributable to shareholders in the second fiscal quarter, reaching $249 million, compared to analysts' estimates of $235 million. Following the earnings release, Lenovo shares experienced a 2.86% decline in early afternoon trading in Hong Kong, outpacing the benchmark index's 1.42% drop.
