Why is Lenovo sinking?

17 August 20238 months ago babelfish

Lenovo had a bad quarter between April and June as revenue fell 24 percent. Blame the worldwide slowdown in computer demand, which also affects chip makers. All the details

Lenovo, a Chinese company that develops and manufactures computers, smartphones and other computing devices, today reported worse-than-expected economic results for the April-June quarter. Revenue, for example, plunged 24 percent on a sustained decline in global demand for PCs, of which Lenovo is the world's largest maker.

LENOVO REVENUE AND SALES DOWN

Lenovo's April-June revenue was $12.9 billion, far below Refinitiv 's $13.8 billion estimate. After the release of the data, the company's shares on the Hong Kong Stock Exchange lost up to 6 percent.

Lenovo's sales have been down for four consecutive quarters. The company also reported a 14 percent drop in profits in the year ending March, the first annual decline since 2019.

THE BANG WITH THE PANDEMIC, AND THE NEXT CRASH

The COVID-19 pandemic had given a significant boost to consumer electronics sales as restrictions created strong demand for remote work and home entertainment products. But then demand began to contract just as significantly due to the increase in inflation and interest rates, which reduced the propensity to spend. The recovery is proceeding slowly and many retailers still have warehouses full of computers to be disposed of, forcing the manufacturers of basic devices and components (such as microchips ) to revise the levels of new production downwards.

IS THE COMPUTER MARKET RECOVERING?

According to Lenovo, its PC business unit is stabilizing and is expected to recover in the latter part of 2023.

Globally, personal computer shipments fell by 12 percent in the second quarter of 2023, according to analysis by Canalys, which is a positive figure considering the decline of more than 30 percent in the previous two quarters.

To improve profit margins, Lenovo said it is focusing more on its servers and IT services divisions, but the computers, smartphones and tablets business unit is still worth about four-fifths of its group revenue. .

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/lenovo-risultati-aprile-giugno-2023/ on Thu, 17 Aug 2023 11:07:03 +0000.