Lenovo On Strong Earnings: 'We Can Grow No Matter The Market Conditions'


Lenovo reported a 25 percent uptick in revenue, thanks to strong PC and smartphone sales for its fiscal fourth quarter. The Chinese PC juggernaut said net profit reached $158 million, up from $127 million a year earlier.

The world's largest PC maker has managed to defy gravity, increasing PC market share as its rivals Hewlett-Packard and Dell have seen steady declines. According to Gartner, worldwide PC shipments have declined nearly 2 percent within the first quarter of 2014. Lenovo has managed to grow sales by 11 percent in the same time frame, Gartner reported.

As for its smartphones, Lenovo gains are attributed to sales in the Chinese market. Lenovo, which has its headquarters in Beijing and Morrisville, N.C., said it's now the fourth-largest smartphone vendor in the world.

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Lenovo, which said it will purchase IBM's x86 server business and acquire from Google the Motorola division that makes smartphone handsets, said smartphone shipments grew 72 percent year-over-year to more than 50 million units globally. Lenovo's Chief Executive Officer Yang Yuanqing has said post-Motorola acquisition is targeting 100 million smartphone units sold in new markets in the Middle East, Africa and Latin America.

In terms of smartphone market share, Lenovo ranks No. 4 globally behind Samsung, Apple and Huawei, according to IDC.

"The record sales and profits that we delivered last year prove that Lenovo can grow and deliver its commitments, no matter the market conditions," said Yang in a statement. "Not only did we strengthen our leading position in PCs, but we gained three points in tablets by quadrupling sales volume and became the fastest-growing major smartphone company in the world. This demonstrates our capability to manage both businesses that are already mature, as well as those that are shifting to maturity."

"Lenovo's revenue is up, and so is my Lenovo business," said Brad Mendel, co-owner of High Plains Technology, a Lenovo partner based in Sioux Falls, S.D. "We have seen XP retirement driving much of our sales, but we anticipate Lenovo ThinkPad sales to continue into 2014.” Over the past five years, Lenovo has earned its market share gains against Hewlett-Packard and Dell with innovative and reliable products, he said.

Mendel and other partners said Lenovo's march to success won't be without its challenges, however. "There is fear of the unknown. There are some customers who don't know if Lenovo is a brand they can trust."

Over the years ,Mendel says Lenovo's North American brand awareness has grown among his customers, making it easier to lead with Lenovo in sales calls. "I don't have to tell customers who Lenovo is anymore. They know the brand; they know ThinkPad and like the product."

Based on a Bloomberg analysis of Lenovo, post-IBM and Google business unit acquisitions, Lenovo will have revenues of $50 billion, up from $15 billion five years ago. Today, Lenovo reported it generated $38.7 billion total year-to-year revenues.

PUBLISHED MAY 21, 2014