Lenovo Q2 net loss $714 mn; India helps boost revenue by 16%

Beijing: Chinese technology giant Lenovo on Thursday reported a net loss of USD 714 million for the September quarter impacted by restructuring costs.

The company had registered a net profit of USD 262 million in the year-ago period.

Without one-time costs, Lenovo said its profit would have been USD 166 million.

In August, Lenovo had said it would cut its workforce by about 5 percent, write off unsold inventory and take charges.

"Lenovo is successfully executing its business realignment plan... As announced in Q1 earnings report, Lenovo incurred USD 599 million in restructuring costs and a USD 324 million one-time charge to clear smartphone inventory in Q2," it said in a statement.

Lenovo's revenue, however, grew 16 percent year-on-year to USD 12.1 billion in the said period from USD 10.4 billion, driven by strong momentum in PC and mobile business across markets, including India.

"With strong execution Lenovo acted swiftly and decisively to address challenges, while still delivering better than previous quarter results," Lenovo Chairman and CEO Yuanqing Yang said.

He added that in the PC, the company hit record share with good profitability and for the mobile business, its strategy to shift growth focus to outside of China continues to pay off as Lenovo has gained share and improved margin.

"The realignment of our organisation and the restructuring of our cost structure will deliver results in the 2nd half of the year," Yang said.

In the PC Group (PCG) that includes PCs and Windows tablets, Lenovo's quarterly sales were USD 8.1 billion, down 17 percent year-over-year with foreign exchange fluctuations hurting demand in EMEA and Brazil.

"India grew 99 percent year-over-year, hitting an impressive record-high 27 percent share (in PC segment)... In Mobile, Lenovo had strong smartphone shipment growth of 135 percent year-over-year, driven by strong momentum in India and inclusion of Moto," it said.

In the Mobile Business Group (MBG), which includes products from Motorola and Lenovo-branded mobile phones, Android tablets and smart TVs, sales were at USD 2.7 billion, up 104 percent year-over-year due to the inclusion of revenues from Motorola.

"In key emerging markets of Indonesia, Russia, India and Brazil, Lenovo outgrew the smartphone market by 12, 175, 48 and 4 points, respectively," it said.

In the Enterprise Business Group (EBG) that includes servers, storage, software and services sold under both the ThinkServer and System x brands, sales were up 5.5 times year-over-year to USD 1.2 billion.

Lenovo, which became the world's leading computer maker after acquiring IBM's PC business in 2005, spent about USD 5 billion to buy Motorola Mobility and IBM's low-end server business last year.