CHINA’S Lenovo Group, the world’s largest maker of personal computers (PCs), on Thursday (Feb 22) reported October to December revenue of US$15.72 billion, up 3 per cent from the same period a year earlier.
The result compared with the US$15.25 billion average of eight analyst estimates compiled by LSEG.
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 per cent to US$337 million in October to December, versus analysts’ US$309 million estimate.
Researcher Gartner in January reported Lenovo’s third-quarter PC shipments grew 3.2 per cent versus the same period a year earlier. Industry-wide PC shipments likewise grew, by 0.3 per cent, reflecting market recovery after an almost two-year decline.
Lenovo controlled 25.6 per cent of the global PC market during 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 per cent to US$2 billion.
Lenovo’s share price rose nearly 2 per cent after the earnings, versus a 0.8 per cent 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”, or personal computers optimised to run artificial intelligence (AI) software. In that time, Lenovo’s stock price has gained more than 25 per cent.
On Thursday, Lenovo said AI PCs – including those capable of running AI applications without being connected to the Internet – will be a strategy focus for the foreseeable future. Last year, 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 will likely reach 50 million units this year and are set to more than triple to 167 million units by 2027, accounting for close to 60 per cent of total shipments, showed data from researcher IDC.
Lenovo, which owns the Motorola smartphone brand, is also working on AI-capable smartphones. This month, Reuters reported Lenovo has 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 handsets this year, making up 15 per cent of the market, IDC data showed. REUTERS
