Lenovo Group Ltd, the worlds biggest PC maker by sales volume, posted a disappointing fourth-quarter profit on Thursday, although full-year performance was only slightly below projections, as the company completed two major acquisitions.
The Chinese computer maker announced that net profit for the fourth fiscal quarter ended March 31st tumbled 36.7% to $100 million from a year earlier, missing analysts projections, while revenue surged 20.7% to $11.3 billion.
The Beijing-based company finalized in October its $2.9-billion purchase of Motorola from Google and the $2.1-billion acquisition of IBMs low-end server business, which dragged on full-year profit. The company has been expanding in other markets such as smartphones and enterprise computing to offset the global decline in PC sales, where it still managed to grow its market share.
The company faces challenges this year in integrating the two new businesses as growth in the Chinese smartphone market slows while global spending on computers declines, but said that both the IBM and Motorola units were on track to deliver their targets.
In full-year terms, the Chinese firm generated net income of $829 million, only slightly below analysts projections of $857 million, while revenue surged 20% to a record $46.3 billion as the companys market share in PCs rose to a fifth and delivered strong performance in mobile. The company also said it has achieved a better balance in operations, with 63% of fourth-quarter revenue coming from PCs, 25% from Mobile and 9% from Enterprise, compared to 83% generated by PCs the prior year.
“Lenovo continues to deliver strong and balanced performance,” said Lenovo Chairman and CEO Yang Yuanqing. “Building on our newly acquired businesses and consistent organic growth of our core operations, three growth engines have been formed. In view of the opportunities and challenges of the new Internet+ era, we are ready to transform ourselves from making mostly hardware to a combination of hardware and software services. This will spur a new wave of growth for Lenovo in the coming years.”
The company reported flat year-over-year revenue of $3.1 billion in China in the fourth quarter, 27% of total, where it remained the leader in PCs with a nearly 34% market share but suffered from tough competition in the mobile phone market. The Asia Pacific region, which accounted for 15% of worldwide revenue at $1.7 billion, saw PC market share rise by 0.2% from a year earlier to 15.7%, while smartphone deliveries surged 40%.
Despite currency pressures, the Europe/Middle East/Africa (EMEA) region saw continued growth and increased profitability, the company said, with revenue jumping 15% to $3.0 billion in the fourth quarter, or 26% of total. Lenovos PC market share in EMEA rose 4.8% from a year earlier to a record 20.5%, while smartphone shipments soared 240% and the enterprise business saw an improvement as well.
Quarterly sales in the Americas region were up 85% year-over-year at $3.6 billion, accounting for 32% of total revenue, mainly due to the addition of Motorola and System x in the geography’s results, Lenovo said. The region saw a record PC market share of 11.7% for the full year, boosted by strong shipments in North America, while the company also takes action to address significant challenges in Brazil.
Lenovo Group Ltd settled 1.05% higher at HKD 13.50 per share on Thursday in Hong Kong, marking a one-year jump of 43.01%. The Chinese computer maker is valued at HKD 147.30 billion.