14 DAY TRIAL // Lenovo Group can truly say that its efforts to cut costs and operate more efficiently yielded the expected results as the company's profit during the first fiscal quarter rose steadily. The company's net profits rose even faster, reaching "$67.8 million, an increase of 1,184 percent over the same period last year", according to the news site InfoWorld. And these profits were registered despite the $45 million spent on restructuring the company.
"Our board and management team are very encouraged by Lenovo's performance over the last couple of quarters," William Amelio, the company's chief executive officer, told analysts during a conference call in which he explained Lenovo's financial results, while he sustained that the company must continue its operational improvement. Lenovo's sales also rose 12 percent after the company decided to cut prices in an effort to better compete against rivals like Dell, Acer and HP. "Lenovo's PC shipments during the quarter rose 22.3 percent to nearly 4.9 million units, up from 4 million during the same period last year, according to IDC. Lenovo did not reveal the total number of units shipped during the period".
The biggest gains came from Europe and North America, areas in which Lenovo was previously losing money after it acquired IBM's PC division. According to the company's press release, now both regions are profitable as shipments in Europe increased by 22 percent, the American ones were up by 15 percent. In Asia, Lenovo is better represented and their shipments, excluding China, jumped 12 percent, while in China alone total Lenovo shipments increased by 30 percent. "Notebook PCs accounted for 53 percent of Lenovo's revenue during its fiscal first quarter, with worldwide shipments up 26 percent over last year. Desktop demand also showed healthy growth, with shipments up 20 percent, representing 43 percent of revenue. Lenovo's handset business, which is confined to China, was relatively flat, with shipments rising just 2 percent and accounting for 3 percent of revenue."
According to a report by IDC, Lenovo is the third largest PC maker, but it feels the pressure from the Taiwanese manufacturer Acer, which has plans to take the lead by the end of this year, even if right now they are evenly matched, holding 6.7 percent of the market each.