Lenovo reports quarterly revenue of $10.8 bn
14 Feb 2014
Chinese PC maker Lenovo yesterday said its quarterly revenue surpassed $10 billion for the first time on strong global demand.
Top executives also explained to shareholders how they planned to maximise profit gains from the recent acquisitions that cost the company over $5 billion.
According to the world's largest personal computer maker, the revenue in its third fiscal quarter ended 31 December, 2013, stood at $10.8 billion, surging 15 per cent year-on-year.
Earnings also shot 30 per cent as against a year ago to $265 million.
Lenovo chairman and CEO Yang Yuanqing said profit growth was pushed by business in PC-plus areas, including smartphones, tablets and servers.
Yang added, the IBM Corp server acquisition was a perfect fit with its PC-plus strategy (See: Lenovo Group to buy IBM's server business for $2.3 billion).
He also sought to allay investor fears about the company's profitability after it spent $3 billion on the acquisition of the money-bleeding Motorola Mobility from Google Inc (See: Lenovo to buy Motorola Mobility from Google for $2.91 bn).
Yang said the company could turn Motorola around financially after just a few quarters once the $2.91-billion deal with Google was finalised and in the books.
Motorola Mobility makes Android smartphones and Bluetooth accessories.
According to Yang, the business would quickly begin contributing to the performance of the company.
However, Yang was less forthcoming about the company's earnings prospects, saying the two acquisitions were still awaiting approval from the US government.
Consequently, prediction of the effect on short-term earnings was a difficult to proposition.
As indicated by Yang, the goal of the company was to ultimately introduce the well-known US manufacturer to Chinese and emerging markets. In addition to the company continuing to produce premium devices, the OEM would be a major competitor in the entry-level sector.
According to a report by Bloomberg, about 3,500 Motorola employees would be transferred to Lenovo, which would help Motorola's financial bottom line – at least on paper. Lenovo was hoping to conclude all deals with regulatory approval within six to nine months.
Meanwhile, commentators have high expectations for Motorola, and hope the company would not plan on exiting the US market even as it entered the Chinese and other markets.
Yang had earlier said the company would challenge Samsung and Apple globally, using a bigger product spectrum and more affordable prices.
