SYS-CON MEDIA Authors: Xenia von Wedel, Peter Silva, Glenn Rossman, Ava Smith, Elizabeth White

News Feed Item

Lenovo Posts Third Quarter 2013/14 Results

Lenovo Group today announced record results for its third fiscal quarter ended December 31, 2013, driven by strong global execution, an innovative product portfolio and an increasing mix of PC Plus revenues. Quarterly revenue was US$10.8 billion, a 15 percent increase year-over-year, passing the US$10 billion milestone for the first time ever. Third quarter profit grew even faster with pre-tax income increasing 30 percent year-over-year to US$321 million, while earnings also grew 30 percent year-over-year to US$265 million. Lenovo shipped a record 32.6 million devices in the quarter or nearly 5 devices every second. Lenovo’s third quarter mix of sales from its Mobile Internet and Digital Home division which develops PC Plus products such as smartphones, tablets and smart TVs, was 16 percent of total revenues, up from 11 percent one year ago and seven percent two years ago, with steadily improving profitability.

For the third straight quarter, Lenovo was the world’s largest PC vendor*, with its highest-ever quarterly market share of 18.5 percent, up 2.4 points year-over-year. Record high share in EMEA, Asia Pacific and China with number one positions in five of the seventh largest PC markets globally – supported this strong performance. Lenovo’s PC shipments for the third fiscal quarter were 15.3 million units, again making it the fastest growing of the top five PC vendors. This was also the 19th quarter in a row that Lenovo outperformed the industry as a whole, growing at a 14 point premium to the market.

Also for a third straight quarter, Lenovo’s combined shipments of smartphones and tablets – 17.3 million devices – surpassed the 15.3 million PCs it sold. It also continued to be the world’s fourth largest smartphone supplier with 4.8 percent share, growing shipments 47 percent year-over-year, driven by excellent performance of its smartphone launches in a number of new markets. In tablets, Lenovo had a record high of 3.4 million shipments, up over 300 percent year-over-year. Tablet strength was driven by the launch of the Yoga Tablet, the world’s first multimode tablet. Together, these results clearly illustrate Lenovo’s PC Plus transformation.

“Lenovo had outstanding performance last quarter, delivering both record revenue and record profit. Leveraging strong execution of our strategy, innovative products and growth in our PC Plus business, we continue delivering on our commitment to improve our profitability and we are confident we will maintain this momentum in our existing businesses,” said Yang Yuanqing, Chairman and CEO of Lenovo. “Further, the Motorola and IBM server acquisitions that we just announced are a perfect fit with our PC Plus strategy. While our top priority now is full participation in the regulatory approvals process, I am confident that from day 1 after closing, these businesses will quickly begin contributing to our performance and develop into pillars for long-term, sustainable growth.”

The Company’s gross profit for the third fiscal quarter increased 15 percent year-over-year to US$1.36 billion, with gross margin at 12.6 percent. Operating profit for the quarter grew 37 percent year-over-year to US$334 million. Basic earnings per share for the third fiscal quarter was 2.56 US cents, or 19.85 HK cents. Net cash reserves as of December 31, 2013 totaled US$3.4 billion.

GEOGRAPHIC OVERVIEW

Lenovo’s China geography totaled US$4 billion in revenue in the third fiscal quarter, relatively stable year-over-year, accounting for 37 percent of the Company’s worldwide revenue. The performance of China reflected a temporary slowdown in the local PC market which has stabilized and is seeing improved pricing, while urbanization, corporate refresh and PC Plus product innovation are driving future demand. During the third quarter, Lenovo further strengthened its PC number-one position in China, with market share in China of 37.9, a 0.5 point year-over-year gain, was number two in smartphones and number three in tablets.

In the Asia Pacific geography, Lenovo’s revenue totaled US$1.6 billion for the third quarter, or 15 percent of the Company’s worldwide revenue, up 22 percent year-over-year. Solid execution drove strong growth of smartphone sales and tablets saw hypergrowth in ASEAN countries. Lenovo also regained its number 1 position in PCs, with a record market share of 15.9 percent, up 2.0 points year-over-year and reached a milestone of selling 1 million smartphones.

Lenovo’s revenue in the Europe/Middle East/Africa (EMEA) geography saw a 25 percent increase in the third fiscal quarter to reach US$2.9 billion, representing 27 percent of Lenovo’s worldwide revenue. During the quarter, Lenovo reinforced its strong PC number 2 position with PC shipments up 27 percent, outperforming the market by 33 percentage points by protecting enterprise PC sales and attacking in SMB and consumer focused PC spaces. Lenovo is now number one in 11 EMEA countries. Notably, EMEA also led the way in driving tablet sales, increasing shipments nearly 450 percent year-over-year.

The Americas geography revenue was US$2.3 billion for the third fiscal quarter, an increase of 36 percent year-over-year, representing 21 percent of the Company’s worldwide revenue. The Americas geography saw its PC shipments grow 28 percent, a 2.7 point share gain to reach 11 percent share, outperforming the market by 31 percentage points. Performance in Brazil – driven by strong management, scaling of a new plant and integration of CCE – resulted in PC shipment growth of 378 percent to a record 18.6 percent market share in the country. US commercial PC business continues to play a significant role in the Americas geography, with shipments up 21 percent YTY, and a 15 point premium to the market.

PRODUCT OVERVIEW

During the third fiscal quarter, Lenovo’s Laptop computers were the largest contributor to the Company’s revenue worldwide, generating 50 percent of Lenovo’s total revenue. Across the industry, laptop shipments were down 6.3 percent year-over-year. Despite this challenging environment, consolidated sales for Lenovo’s laptop PC business worldwide in the third fiscal quarter totaled US$5.4 billion, an increase of 11 percent year-over-year. The Company gained 2.7 share points and achieved a market share of 18.8 percent. During the third fiscal quarter, the Company announced the Lenovo A10, an affordable, ultra-portable, dual-mode laptop and the Company’s first to run Android 4.2 OS. Weighing less than 1kg and measuring just 17.3 mm at its thickest point, the Lenovo A10 is one of the thinnest and lightest consumer laptops in the market today.

Lenovo’s Desktop PC shipments grew 9.1 percent worldwide year-over-year during the third fiscal quarter, compared to an overall industry decrease of about 3 percent. As a result, Lenovo gained 2 share points year-over-year and achieved a market share of 18 percent. Consolidated sales of Lenovo desktop PCs in the third quarter increased by 12 percent year-over-year to US$ 3.2 billion, or 29 percent of the Company’s total revenue. During the quarter, Lenovo announced four new all-in-one desktop PCs, extending the Company’s lead in that competitive product category. Featured was the super-widescreen Lenovo B750, with its 29” display. According to IDC, Lenovo is number one in the worldwide AIO market, across both the consumer and commercial segments.

Consolidated sales of Lenovo’s Mobile Internet and Digital Home (MIDH) products, including smartphones and tablets increased 73 percent year-over-year during the third fiscal quarter to US$ 1.7 billion, representing 16 percent of the Company’s total revenue during the quarter. Tablet shipments grew by 326 percent year-over-year for a record 3.4 million units with 4.3 percent market share. During its third fiscal quarter, Lenovo announced its multimode Yoga Tablet featuring three unique modes: hold, tilt and stand, giving consumers a better way to use a tablet and an incredible 18 hours of battery life. Yoga Tablet was announced at a livestream launch event with actor Ashton Kutcher, who debuted as Lenovo’s newest product engineer. Also announced in the third quarter was Lenovo’s Miix2 8-inch tablet, a follow on from its popular predecessor, the Lenovo Miix Tablet.

LENOVO’S M&A TRACK RECORD AND RECENT ACQUISITIONS

Since closing its acquisition of IBM’s personal computer business and ThinkPad line in 2005, it has successfully managed six integrations including the joint venture with NEC in Japan, the acquisition of Medion in Germany, the acquisition of CCE in Brazil, the strategic partnership and joint venture with EMC in the US, the acquisition of Stoneware in the US and its joint venture with Compal in China. During this time, Lenovo has become the world’s number one PC company, number 2 PC + Tablet maker, number three Smart Connected Device maker, all while growing revenue and profitability many times over.

Lenovo’s recently announced investments in Motorola Mobility and the IBM server business are logical next steps in the successful “PC Plus” strategy. Upon close of the IBM server transaction, Lenovo will be the number 3 server player globally in a business with higher margins than PCs. With Motorola’s close, Lenovo becomes a strong number three smartphone maker. A range of cost saving and scaling opportunities, the iconic Motorola brand and the opportunity to expand Motorola’s global reach will quickly place this business on a path to tangible success. Upon close, Lenovo firmly believes they will accelerate the geographical reach and competitiveness of its existing smartphone, tablet and server businesses, while ensuring future growth is even stronger and more sustainable.

*see IDC data 4Q 2013

ABOUT LENOVO

Lenovo (HKSE: 0992) (Pink Sheets: LNVGY) is a US$34 billion personal technology company – and the largest PC company in the world, serving customers in more than 160 countries. Dedicated to building exceptionally engineered PCs and mobile internet devices, Lenovo’s business is built on product innovation, a highly-efficient global supply chain and strong strategic execution. Formed by Lenovo Group’s acquisition of the former IBM Personal Computing Division, the company develops, manufactures and markets reliable, high-quality, secure and easy-to-use technology products and services. Its product lines include legendary Think-branded commercial PCs and Idea-branded consumer PCs, as well as servers, workstations, and a family of mobile internet devices, including tablets and smart phones. Lenovo, a global Fortune 500 company, has major research centers in Yamato, Japan; Beijing, Shanghai and Shenzhen, China; and Raleigh, North Carolina. For more information see www.lenovo.com.

         

LENOVO GROUP

FINANCIAL SUMMARY

For the fiscal quarter ended December 31, 2013

 

(in US$ millions, except per share data)

 
 
Q3
13/14
   
Q3
12/13
   
Y/Y
CHG
Revenue 10,789       9,359       15 %
Gross profit 1,363       1,190       15 %
Gross profit margin 12.6 %     12.7 %     -0.1pt  
Operating expenses (1,029 )     (947 )     9 %
Expenses-to-revenue ratio 9.5 %     10.1 %     -0.6 pt  
Operating profit 334       243       37 %
Other non-operating (expenses) / income (13 )     3       n/a  
Pre-tax income 321       246       30 %
Taxation (56 )     (46 )     20 %
Profit for the period 265       200       33 %
Non-controlling interests 0       (5 )     n/a  
Profit attributable to equity holders 265       205       30 %
EPS (US cents)
Basic 2.56 1.99
Diluted 2.52       1.96        

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
The definition of IoT is not new, in fact it’s been around for over a decade. What has changed is the public's awareness that the technology we use on a daily basis has caught up on the vision of an always on, always connected world. If you look into the details of what comprises the IoT, you’ll see that it includes everything from cloud computing, Big Data analytics, “Things,” Web communication, applications, network, storage, etc. It is essentially including everything connected online from ha...
We are all here because we are sold on the transformative promise of The Cloud. But what good is all of this ephemeral, on-demand infrastructure if your usage doesn't actually improve the agility and speed of your business? How must Operations adapt in order to avoid stifling your Cloud initiative? In his session at DevOps Summit, Damon Edwards, co-founder and managing partner of the DTO Solutions, will highlight the successful organizational, process, and tooling patterns of high-performing c...
Software-driven innovation is becoming a primary approach to how businesses create and deliver new value to customers. A survey of 400 business and IT executives by the IBM Institute for Business Value showed businesses that are more effective at software delivery are also more profitable than their peers nearly 70 percent of the time (1). DevOps provides a way for businesses to remain competitive, applying lean and agile principles to software development to speed the delivery of software that ...
Docker offers a new, lightweight approach to application portability. Applications are shipped using a common container format and managed with a high-level API. Their processes run within isolated namespaces that abstract the operating environment independently of the distribution, versions, network setup, and other details of this environment. This "containerization" has often been nicknamed "the new virtualization." But containers are more than lightweight virtual machines. Beyond their small...
The move in recent years to cloud computing services and architectures has added significant pace to the application development and deployment environment. When enterprise IT can spin up large computing instances in just minutes, developers can also design and deploy in small time frames that were unimaginable a few years ago. The consequent move toward lean, agile, and fast development leads to the need for the development and operations sides to work very closely together. Thus, DevOps become...
Cloud Expo 2014 TV commercials will feature @ThingsExpo, which was launched in June, 2014 at New York City's Javits Center as the largest 'Internet of Things' event in the world.

ARMONK, N.Y., Nov. 20, 2014 /PRNewswire/ --  IBM (NYSE: IBM) today announced that it is bringing a greater level of control, security and flexibility to cloud-based application development and delivery with a single-tenant version of Bluemix, IBM's

An entirely new security model is needed for the Internet of Things, or is it? Can we save some old and tested controls for this new and different environment? In his session at @ThingsExpo, New York's at the Javits Center, Davi Ottenheimer, EMC Senior Director of Trust, reviewed hands-on lessons with IoT devices and reveal a new risk balance you might not expect. Davi Ottenheimer, EMC Senior Director of Trust, has more than nineteen years' experience managing global security operations and asse...
The major cloud platforms defy a simple, side-by-side analysis. Each of the major IaaS public-cloud platforms offers their own unique strengths and functionality. Options for on-site private cloud are diverse as well, and must be designed and deployed while taking existing legacy architecture and infrastructure into account. Then the reality is that most enterprises are embarking on a hybrid cloud strategy and programs. In this Power Panel at 15th Cloud Expo (http://www.CloudComputingExpo.com...
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at Internet of @ThingsExpo, James Kirkland, Chief Ar...
Leysin American School is an exclusive, private boarding school located in Leysin, Switzerland. Leysin selected an OpenStack-powered, private cloud as a service to manage multiple applications and provide development environments for students across the institution. Seeking to meet rigid data sovereignty and data integrity requirements while offering flexible, on-demand cloud resources to users, Leysin identified OpenStack as the clear choice to round out the school's cloud strategy. Additional...
Technology is enabling a new approach to collecting and using data. This approach, commonly referred to as the "Internet of Things" (IoT), enables businesses to use real-time data from all sorts of things including machines, devices and sensors to make better decisions, improve customer service, and lower the risk in the creation of new revenue opportunities. In his General Session at Internet of @ThingsExpo, Dave Wagstaff, Vice President and Chief Architect at BSQUARE Corporation, discuss the ...
The security devil is always in the details of the attack: the ones you've endured, the ones you prepare yourself to fend off, and the ones that, you fear, will catch you completely unaware and defenseless. The Internet of Things (IoT) is nothing if not an endless proliferation of details. It's the vision of a world in which continuous Internet connectivity and addressability is embedded into a growing range of human artifacts, into the natural world, and even into our smartphones, appliances, a...
SYS-CON Media announced today that Aruna Ravichandran, VP of Marketing, Application Performance Management and DevOps at CA Technologies, has joined DevOps Journal’s authors. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. DevOps Journal brings valuable information to DevOps professionals who are transforming the way enterprise IT is done. Aruna's inaugural article "Four Essential Cultural Hacks for DevOps Newbies" discusses how to demonstrate the...
"BSQUARE is in the business of selling software solutions for smart connected devices. It's obvious that IoT has moved from being a technology to being a fundamental part of business, and in the last 18 months people have said let's figure out how to do it and let's put some focus on it, " explained Dave Wagstaff, VP & Chief Architect, at BSQUARE Corporation, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.