PC maker Lenovo reports loss amid weak demand

Aug 06, 2009 By JOE McDONALD , AP Business Writer
FILE - In this May 20, 2009 file photo, models display new Chinese-made Lenovo ThinkPads at the Lenovo stall during the International High Tech Expo in Beijing, China. Lenovo Group, the world's fourth-largest personal computer maker, reported a $16 million quarterly loss Thursday, Aug. 6, 2009, amid weak global demand but said its market share grew. (AP Photo/ Elizabeth Dalziel, File)

(AP) -- Lenovo Group, the world's fourth-largest personal computer maker, reported a $16 million quarterly loss Thursday and said it faces pressure from weak global demand and intense competition.

The loss for the three months ending June 30, equal to 0.18 cents per share, compared with a $110 million profit a year earlier. Sales fell 17.9 percent from a year earlier to $3.5 billion.

"Lenovo showed strong progress this last quarter but we still face numerous challenges," CEO Yang Yuanqing told reporters in a conference call.

Lenovo's global PC shipments rose 1.1 percent from a year earlier while industrywide shipments fell 3.3 percent, said chief financial officer Wong Wai Ming. But he said average prices fell by 20 percent due to competition.

Yang said Lenovo has been hurt by its reliance on sales to commercial customers, which have responded to the worst global economic downturn since the 1930s by cutting spending more sharply than consumers.

"We cannot say we have seen the bottom of the ," Yang said. "The continues to significantly impact our core commercial customers."

Executive said Lenovo was making progress in a previously announced restructuring and was improving profitability. The company says the restructuring is expected to cut expenses by $300 million a year.

Lenovo's global market share rose 0.4 percentage points to 8.6 percent, its highest since the company's 2005 acquisition of IBM Corp.'s PC unit, Yang said.

Lenovo said sales in China were $1.7 billion, unchanged from a year earlier, but shipments rose 15 percent. It said market share grew by 0.3 percentage points to 28.6 percent.

Lenovo has benefited from China's resilience against the but faces competition from industry leader Hewlett-Packard Co. and No. 2 Dell Inc. Chinese economic growth accelerated in the last quarter to 7.9 percent from a year earlier, up from 6.1 percent the previous quarter.

The company said sluggish U.S. and European demand contributed to a 17 percent drop in to mature markets. It said sales in those markets were $1.3 billion, or 38 percent of its global total.

Shipments to emerging markets fell 6 percent from a year earlier, Lenovo said.

The company's founder, Liu Chuanzhi, returned as chairman in a management reshuffle in February in which American CEO William J. Amelio departed after a three-year stint. Amelio was succeeded by Yang, Lenovo's former chairman.

Lenovo says its restructuring, announced earlier, should cut costs by $300 million a year.

©2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Explore further: Sony faces 4th ex-employee lawsuit over hack

add to favorites email to friend print save as pdf

Related Stories

Lenovo reports losses as sales plummet (Update)

May 21, 2009

China's Lenovo, the world's fourth largest maker of personal computers, Thursday reported a net loss of 226.4 million US dollars in the 2008-09 fiscal year citing structural changes and weak sales.

Lenovo Eliminating 1,400 Jobs

Apr 20, 2007

The PC maker says it will save $100 million this fiscal year by eliminating some jobs and moving other positions to emerging markets.

PC shipments slide in 1Q, HP tops Dell in US (Update)

Apr 15, 2009

(AP) -- Global shipments of personal computers fell 7.1 percent in the first three months of the year, but the decline was smaller than expected and research group IDC on Wednesday said the industry could turn around by ...

Lenovo's bid to challenge Dell

Dec 21, 2005

The Chinese computer group that bought out the personal computer unit of IBM earlier this year said late Tuesday its chief executive officer would step down after only eight months on the job. Stephen Ward will be succeeded ...

Recommended for you

Why the Sony hack isn't big news in Japan

7 hours ago

Japan's biggest newspaper, Yomiuri Shimbun, featured a story about Sony Corp. on its website Friday. It wasn't about hacking. It was about the company's struggling tablet business.

Sony faces 4th ex-employee lawsuit over hack

12 hours ago

A former director of technology for Sony Pictures Entertainment has sued the company over the data breach that resulted in the online posting of his private financial and personal information.

Sony tells AFP it still plans movie release

13 hours ago

Sony Pictures boss Michael Lynton denied Friday the Hollywood studio has "caved" by canceling the release of "The Interview," and said it still hoped to release the controversial film.

2012 movie massacre hung over 'Interview' decision

Dec 19, 2014

When a group claiming credit for the hacking of Sony Pictures Entertainment threated violence against theaters showing "The Interview" earlier this week, the fate of the movie's big-screen life was all but ...

Clooney slams skittish Hollywood after Sony hack

Dec 19, 2014

Film star George Clooney slammed the Hollywood movie industry for failing to stand up against the cyber threats that prompted Sony Pictures to cancel release of the movie "The Interview."

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.