Lenovo Achieves Record Revenues Amid An Industry In Decline

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The Lenovo Group recently announced record annual sales amounting to some $34 billion, a figure that reflects the continuing movement of the global electronic device industry toward a new center of gravity in Asia.

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The company’s full-year pre-tax income climbed 38 percent to a record $801 million this past year.  In terms of actual earnings, the company raked in $635 million, registering an impressive 34 percent increase in the midst of an industry that declined more than 13 percent year-over-year.

“Despite a challenging macro-economic environment and ongoing PC industry transformation, Lenovo delivered a strong performance in the 2012/13 fiscal year,” Yang Yuanqing,  the company’s chairman and CEO, said in a statement.

Growth amid a slumping industry

Lenovo is second only to Hewlett-Packard as the world’s largest manufacturer of computers, but the company said sales of its laptops and desktop PCs actually fell by two percent between January and the end of March.  Still, laptops and desktop PCs accounted for some 83 percent of the company’s business during the quarter — and with a total 52.4 million PCs shipped throughout the year, Lenovo managed to post a 10.2 percent growth in PC sales year-on-year.

Tablet, smartphone and enterprise hardware products were Lenovo’s biggest source of income throughout the quarter, however, allowing the company a hefty 90 percent increase in quarterly profits as more and more consumers made the switch to mobile and wireless phone service. “Our smartphone and tablet business saw a dramatic growth,” said Yang.  “In fact, smartphone shipments were 3.7 times greater than last year globally and we are now number two in the China smartphone market.”

This early, the investment strategy touted by company executives indicates that Lenovo has already begun to concentrate the bulk of its investments on mobile devices.  “We will focus our investments on the fast-growing on the tablet, smartphone and enterprise hardware areas, while working to enhance the profitability of our core PC business,” Yang said.

Regional performance

The company said its quarterly sales in North America — a regional market in which Lenovo has always struggled — rose 13 percent from the previous year to some $1.2 billion, accounting for 15 percent of the global total.  In China, the company’s home market, quarterly sales increased by some eight percent to $3.1 billion even as its revenues from mobile devices in that region climbed a healthy 74 percent.

The company managed to increase its share of the Asia-Pacific and Latin American markets by some 11.1 percent in the fourth fiscal quarter, gaining the number one spot in Japan in terms of PC shipments.  Its consolidated sales throughout the region amounted to some $1.7 billion — which is around 21 percent of Lenovo’s worldwide sales.

The company’s performance in Europe, the Middle East and Africa was equally impressive as its PC sales across  the region registered an 11 percent growth in the fourth quarter.  Lenovo now commands an 11.8 percent share of that regional market.

Thinking big and aiming high

Industry observers say the company has set it sights on moving around 60 million smartphones this year, effectively tripling sales achieved in 2012.  Liu Jun, Lenovo’s senior vice president, said the company sees Apple Inc. and the Samsung Group as its biggest rivals in the smartphone segment.

The Beijing Business Today meanwhile reports the company aims to become the biggest smartphone manufacturer in China by 2015.  Samsung is currently the top smartphone vendor in that country with a 16.7 percent share of the burgeoning Chinese smartphone market.

But the research firm Gartner predicts 2013 will be a stellar year for Lenovo.  Gartner’s analysts believe the company could very well leapfrog over its competition in China this year because of strong brand recognition, nationwide distribution, a strong portfolio and reasonable pricing.

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Author : Michelle Simpson is a full-time professional editor that focuses on online writing services, specialized in the field of technology like RingCentral Business Phones Systems, business and current trends in the industry.

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