Lenovo Group, the world’s largest PC maker, reported a 24% decline in revenue for the January-March quarter. The fall in revenue marks the third consecutive quarter of on-year decline, with revenue shrinking 14% for the full year through March. Despite the COVID-19 pandemic initially boosting electronics sales, demand for PCs has continued to slump, resulting in a decline in revenue for Lenovo.
Revenue Results
Lenovo’s fourth-quarter revenue was $12.63 billion, down 24% from the same period a year earlier. This result met market expectations and was comparable to the average of eight analyst estimates compiled by Refinitiv. Global PC shipments across the industry declined 29% in January-March to 56.9 million units, fewer than the same period in pre-pandemic 2018 and 2019, according to data from researcher IDC.
Non-PC Business Expansion
To improve profit margins, Lenovo has been expanding non-PC businesses such as smartphones, servers, and information technology (IT) services. For the full year through March, its non-PC businesses grew 7% and now make up about 40% of total revenue. This expansion has been a key strategy for Lenovo to mitigate the effects of declining PC demand.
Net Income and Share Prices
Overall net income attributable to shareholders in January-March fell 72% to $114 million versus analysts’ estimate of $212.49 million. The price of Lenovo shares fell 3.7% in morning trade before the earnings results were released, compared with a 0.94% decline in the benchmark index.
Lenovo’s revenue decline in Q4 due to declining PC demand highlights the ongoing shift towards non-PC businesses in the technology industry. As remote work continues to shape the future of work, companies will need to adapt to changing consumer demands and expand their offerings beyond traditional PCs to remain competitive.
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