Tide changes for Lenovo’s revenue
China’s Lenovo Group, the world’s largest maker of personal computers (PCs), on Thursday reported revenue for October-December of $15.72bn, up 3% from the same period a year earlier.
The average of eight analyst estimates compiled by LSEG was for $15.25bn.
Revenue started contracting in 2022 at the end of a boom in demand for PCs and other electronic products brought about by Covid-19. Lenovo then recorded five quarters of revenue decline, with analysts forecasting growth in the sixth.
Net income attributable to shareholders fell 23% to $337m in the period, versus analysts’ $309m estimate.
Researcher Gartner in January reported Lenovo’s third-quarter PC shipments grew 3.2% versus the same period in 2023. Industrywide PC shipments likewise grew, by 0.3%, reflecting market recovery after an almost two-year decline.
Lenovo controlled 25.6% of the global PC market in the period, Gartner data showed, with HP, Dell and Apple in second, third and fourth place.
The PC maker is working to improve profitability by expanding non-PC businesses — the most notable of which sells information technology services to enterprises. Revenue for its service business unit rose 10% to $2bn.
Lenovo’s share price rose nearly 2% after the earnings, versus a 0.8% increase in the benchmark Hang Seng index.
Investors have been buying Lenovo shares over the past 12 months in part due to potential demand for “AI PCs”, which are optimised to run artificial intelligence (AI) software. In that time, the Lenovo stock price has gained more than 25%.
On Thursday, Lenovo said AI PCs — including those capable of running AI applications without being connected to the internet — would be a strategy focus for the foreseeable future. In 2024, it unveiled more than 10 AI-capable PCs at the International Consumer Electronics Show.
“Looking ahead, our commitment to AI innovation, our pocket to cloud computing capabilities, full stack portfolio of smart devices, smart infrastructure, smart solutions and services, combined with our partnerships with other key leaders in AI, will ensure that we are well positioned to capture the tremendous opportunities in AI,” said CEO Yang Yuanqing.
AI PC shipments are likely to reach 50-million units in 2024 and are set to more than triple to 167-million units by 2027, accounting for close to 60% of total shipments, data from researcher IDC showed.
Lenovo, which owns the Motorola smartphone brand, is also working on AI-capable smartphones. In February, Reuters reported Lenovo had partnered with Chinese search engine leader Baidu to equip its phones with Baidu’s large language model “Ernie”.
Shipments of AI-capable smartphones are likely to reach 170-million in 2024, making up 15% of the market, IDC data showed.