Lenovo shares pummeled on revenue decline | Business| Economy and finance news from a German perspective | DW | 03.02.2016
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Lenovo shares pummeled on revenue decline

The world's biggest maker of personal computers saw its revenue fall for the first time in six years due to slumping PC and smartphone sales at the end of last year, sending its shares down in Hong Kong.

Lenovo shares fell more than 10 percent at the Hong Kong stock exchange Wednesday, after the Chinese technology giant reported 8 percent lower sales for the final quarter of 2015. Sales slumped to $12.9 billion (11.8 billion euros) between October and December, marking the first quarterly revenue decline for the world's largest PC maker in six years.

Lenovo was strongly hit by falling demand for its personal computers - down 12 percent - and a four-percent decline in its mobile unit compared to the same period a year ago.

Francis Lun, chief executive of Geo Securities in Hong Kong said Lenovo's handset business was still not profitable.

"Lenovo planned to turn around Motorola within one or two years but so far it hasn't happened and I think the handset business is too competitive," Lun told the news agency AFP, referring to Lenovo's multi-billion dollar purchase of Motorola.

The Beijing-based company bought Motorola from Google for $2.9 billion in October 2014, soon after its purchase of IBM's low-end server business, as part of a strategy of broadening the business beyond PCs.

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Earnings surprise

In spite of slumping sales, the world's biggest PC maker posted a surprise gain in net profit for the third quarter. It earned $300 million - 19 percent more year-on-year - and beating analysts' forecasts who had predicted a decline in profit to about $242 million.

Last August, Lenovo announced plans to slash costs by $1.35 billion and cut 3,200 staff from its non-manufacturing workforce in hopes to achieve what it called "competitive cost structure across all of its businesses" amid "challenging market environment."

In the second half of 2015, Lenovo achieved $650 million in total savings.

uhe/kd (dpa, Reuters, AFP)

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