Still a force
What a difference a year can make in the tech world. Chinese mainland computer giant Lenovo was the darling of investors after it reported healthy growth in profit and revenue. The company’s command of the global market’s largest share for personal computers seemed unassailable and sales of its smartphones in the highly competitive Chinese mainland market were brisk.
Lenovo is now the favorite target of market short sellers.
As the world’s largest computer producer, it was seen to have been hardest hit by the downturn in global demand for personal computers. At the same time, the company was widely believed to be falling way behind rivals Xiaomi and Huawei in smartphone sales on the Chinese mainland.
Earlier this month, Lenovo posted earnings of $105 million for the first quarter of 2015 — down 51 percent from a year ago — while revenue rose by 3 percent to $10.7 billion, which was below forecasts.
The company said it had been facing the “toughest market environment for years” and announced 3,200 job cuts to save costs.
In its profit announcement, the company noted, in particular, the sharp decline in smartphone sales, which came as a big disappointment following its acquisition of the Motorola brand from Google for $2.9 billion last year, specifically to its market position.
Lenovo had gone though tougher patches before, but it managed to recover every time by leveraging on its manufacturing prowess and the comprehensive sales network on the Chinese mainland — the world’s largest market for personal computers. What Lenovo lacks is design flair. The company produces some of the best personal computers at various price points. Its flagship products have consistently won rave reviews in tech magazines in the United States, its major overseas market. But none of its products can excite buyers as much as those produced by Apple. Even Dell, another mainstream computer maker, has come up with occasional models that figuratively set the market on fire.
Of course, the timeless ThinkPad form factor that has distinguished Lenovo’s products for many years has remained popular with corporate users.
But the design of the company’s consumer line of products has never quite caught on. What’s more, the company’s better-designed products are either too expensive or under spec.
As a gadget freak, I bought the company’s U model years ago in Shanghai when it first came out just for the design, which, to me at least, doesn’t look outdated even now. But it cost considerably more than machines with the same specs and it’s heavy by today’s laptop standards.
Although it’s slow and clunky, I still use my Lenovo laptop regularly because of its excellent keyboard.
But its battery life is too short and the device is too heavy to be carried on a trip. Despite its flaws, the machine shows what Lenovo can do if it sets its mind on doing it.
So all short sellers beware!