Lenovo posts first loss in almost two years

CHINESE personal computer maker Lenovo Group warned of higher costs and margin pressure due to shortages of components like memory chips, as it posted its first quarterly loss in almost two years on Friday. Lenovo, which gave up its title as the world’s largest PC maker to HP in the quarter through June, lost $72 million compared with a profit of $173 million for the same period last year. It was the company’s first quarterly loss since September 2015 and lagged analysts’ average forecast of a $5.29 million profit, sending the stock down as much as 5 per cent to a yearlow of HK$4.52 during Friday morning trade. The outlook for the rest of the year was challenging as component shortages would dive costs higher, possibly forcing the company to raise its selling price to protect margins, executives said. “Most of the component cost is stabilizing except memory ... and the price is still going up,” Lenovo Chief Operating Officer Gianfranco Lanci said on an earnings call. Memory prices rises would continue “at least until the end of the year”, albeit at a slower rate than the past two quarters, he said, a product of exploding global demand for semiconductors. Auto industry demand was also pushing up the price of batteries, he said. While personal computer makers around the world are struggling as consumers switch to mobile devices, Lenovo’s core PC business is declining more rapidly than many of its competitors’. Lenovo posted a 6 per cent decline in PC shipments in the quarter, compared with a 3 per cent fall globally.