Chinese Lenovo shrugs off concerns over shrinking global PC market
Revenue of the world’s largest PC maker Lenovo fell for a third straight quarter as global demand for personal computers continues to slump, but the company isn’t worried, says chief financial officer Wong Wai-Ming.
“We are number one in PCs. Obviously, when the market returns to normal, we will definitely see growth,” Wong Wai-Ming, chief financial officer of Lenovo, told CNBC.
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He added that the company is actually seeing higher growth in other businesses such as infrastructure solutions and services.
In its latest earnings report on Wednesday, Lenovo said it expects “the PC market to return to growth” in the second half of 2023.
The company reported a decline in revenue in the January-March quarter. Revenue for the quarter was $12.63 billion, down 24% from a year ago and marked the third consecutive quarter of year-over-year declines.
“Fiscal Q4 was the most challenging quarter of the year given pressures from the PC market and the global economy,” Lenovo said in the earnings report.
But the CFO is optimistic that its non-PC businesses – devices, infrastructure solutions as well as solutions and services – can help diversify the business.
“Our full-year revenue actually didn’t decline much as the other two business groups generated significant growth in part due to the infrastructure business. The margin was also mitigated or offset by our significant growth in our business,” Wong said.
Lenovo’s non-PC business grew 7% and now accounts for nearly 40% of total revenue for the full year through March. The remaining 60% of revenue still comes from the PC business.
“The revenue mix of our non-PC businesses increased to almost 40%. Our clear strategy is working and our operation is resilient even in the face of global uncertainties,” said Yuanqing Yang, President and CEO of Lenovo Group on the earnings conference call. . “Going forward, we will continue to invest in [research and development] to seize the next wave of growth opportunities, so we are well prepared for the future.”
PC makers have benefited from a pandemic-driven boom that has seen consumers and businesses grab hold of laptops, tablets and laptops to transition from in-office to remote work. But as workers returned to the office, PC shipments plummeted.
Global desktop and laptop computer shipments contracted about 30% to 56.9 million units in the first quarter of 2023 from a year ago, according to IDC data.
Lenovo’s device revenue was down 33% year-over-year in the first quarter.
But Wong is optimistic about the artificial intelligence driving the company’s device business. Accelerating digitization, AI and chatbots “actually require devices” to operate them, Wong told CNBC.
“Eventually, we will have three big business growths that will generate revenue rather than what we had in the past – just having the PC as the main driver. Over time, we will have three business groups that will generate profitability,” said said Wong.
Lenovo shares were down 1.8% in Thursday morning trading.