Lenovo says profit down 78% on weaker sales

Lenovo says profit down 78% on weaker sales
AP
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First Published: Fri, Nov 07 2008. 12 55 PM IST
Updated: Fri, Nov 07 2008. 12 55 PM IST
Bejing: Lenovo Group, the world’s fourth-biggest maker of personal computers, said Friday its quarterly profit dived 78% as the global economic slowdown battered sales.
Profit for the three months ending 30 September was $23 million, or 0.27 U.S. cents per share, compared with $105 million, or 1.22 U.S. cents per share, in the same period last year, the Beijing-based company said. Lenovo said it eked out a 0.4% rise in total global sales to $4.33 billion.
“Due to the impact of the global economic downturn, and a shortfall in the execution of our strategic plan, Lenovo’s performance in the second quarter did not meet our expectations,” said chairman Yang Yuanqing in a statement.
Yang said Lenovo would take steps to improve efficiency, cut costs and speed up growth in emerging and consumer markets. He gave no details of the planned cost-cutting.
Lenovo’s profit growth had stayed strong through the previous quarter despite slowing global economic growth. The company said it expected to avoid a big hit from the U.S. slowdown because the bulk of its sales were in faster-growing emerging markets.
This quarter, Lenovo said sales in Greater China _ which includes Hong Kong and Taiwan - rose 11% to $1.9 billion. But elsewhere, shipments in the Americas were off 4% and in the Asia-Pacific outside China down 10%.
The results were a sharp turnabout for Lenovo, which had racked up double-digit annual increases in sales and profits following its acquisition of IBM Corp.’s personal-computer unit in 2005.
President and CEO William J. Amelio said Lenovo will “stay the course” and tried to reassure investors that its strategy is “solid and fundamentally strong.”
“Under these adverse market conditions, balancing growth and profitability are equally critical,” Amelio said in the statement. “We must respond by aggressively pursuing growth opportunities while continuing to manage our operating structure even more efficiently.”
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First Published: Fri, Nov 07 2008. 12 55 PM IST