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Lenovo Reports Global Profitability in First Fiscal Quarter 2005/06
Posted on 10-Aug-2005 21:30. | Tags Filed under: News.

Lenovo Reports Global Profitability in First Fiscal Quarter 2005/06
Lenovo results for its first fiscal quarter ended 30 June 30 2005 showed some strong organic growth, outpacing the industry in key emerging markets, as well as growth from the acquisition of the former IBM Personal Computing Division.
Lenovo's consolidated turnover increased 234 percent (year-to-year) to US$2.5 billion. Pre-tax profit increased 54 percent to US$66 million. Basic earnings per share decreased 8 percent, reflecting dilution related to the acquisition of the former IBM PC Division.

Lenovo's PC operations in China, the Americas and Europe and its mobile handset business were profitable; Asia Pacific PC operations (excluding Greater China) showed a small loss. The Group reported US$2.3 billion in turnover in its global PC business.

Lenovo's PC shipments were up 7 percent year-to-year and 14 percent quarter-to-quarter, the highest comparable quarter of PC shipments on record, based on industry reports.

Steve Ward, Lenovo's chief executive officer attributed the performace to innovative products such as the ThinkPad X41 Tablet PC, the Lenovo Yangtian desktop with its one-key virus-kill feature and the ET960 Pocket PC Phone Edition, combined with the commitment of employees, business partners and suppliers.

"We are generating the anticipated benefits of the acquisition quickly, ahead of schedule. Customers are embracing the new Lenovo. Lenovo outpaced the PC industry in emerging markets, and we are focused on driving similar momentum in mature markets," said Mr. Ward.

Lenovo's PC leadership in the China market and in Asia increased, with the company maintaining its number-one market share position in China with share gains year-to-year and sequentially, and regaining its PC market share leadership in Asia Pacific overall (excluding Japan), according to industry reports.

Globally, Lenovo outperformed the industry in key emerging markets. According to industry reports, Lenovo delivered year-to-year shipment growth of 35 percent in India, 58 percent in Brazil, 50 percent in Russia, and 24 percent in Greater China.

In May and June, Lenovo's turnover in the Americas was US$707 million and the segment reported US$32 million in operating profit. In the Europe, Middle East and Africa (EMEA) region, turnover was US$476 million, with US$5 million in operating profit.

The company noted that quarter-to-quarter, shipments increased in both regions, citing industry reports of sequential shipment growth of 4 percent in the Americas and 10 percent in EMEA. In both regions, despite competitive pricing pressure, Lenovo's margins showed strength.

Lenovo's turnover in Asia Pacific (excluding Greater China) was US$321 million for May and June, with the unit reporting an operating loss of US$3 million. Industry reports indicated that quarter-to-quarter shipments were up slightly. Lenovo noted that its performance was strong in India with some weakness in Japan.

Total turnover for Lenovo's notebook PC business was US$1.2 billion. Globally, Lenovo's commercial notebook market share increased quarter-to-quarter, as enterprise buying for ThinkPads gained momentum. The company noted that response to the new x41 Tablet PC has been excellent. In China, strong performance came from notebook adoptions by high-end consumers.

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