Lenovo PC And Data Center Sales Soar To Record $14.5B
‘Our record results this quarter reflect our ongoing commitment to meeting the needs of the rapidly growing work-, learn- and play-from-home economy,’ says Lenovo Chairman and CEO Yang Yuanqing.
Lenovo, the world’s largest PC company, saw massive sales growth across the board during its second fiscal quarter as profit soared 53 percent year over year to $470 million.
Lenovo’s total revenue hit an all-time high of $14.5 billion during its second fiscal quarter, which ended Sept. 30, representing a 7 percent increase year over year as revenue continues to rise during the COVID-19 pandemic. Sales from Lenovo’s PC and Smart Device Group climbed 8 percent year over year to $11.4 billion, another milestone for the company.
Lenovo Chairman and CEO Yang Yuanqing said Lenovo’s operational capability, timely response to work-from-home and learn-from-home initiatives stemming from the coronavirus pandemic, and its focus on high-growth and premium segments drove the record quarterly performance.
“Our record results this quarter reflect our ongoing commitment to meeting the needs of the rapidly growing work-, learn- and play-from-home economy,” said Yang in a statement. “As the world continues to adjust to the ‘new normal’, we are confident in the long-term growth potential of both devices and cloud infrastructure.”
Lenovo is expecting that the total PC market will grow beyond what analysts are forecasting, predicting around 300 million units to be sold in calendar year 2020.
On the infrastructure front, Lenovo’s Data Center Group reported total revenue of $1.48 billion, up 11 percent year over year.
Data center growth was led by its cloud service provider segment, which was up 34 percent compared with its second-quarter 2019. Revenue in the enterprise and SMB markets was flat year over year. The company saw year-over-year growth in software-defined infrastructure, up 22 percent; software sales increased 47 percent; and services rose 11 percent.
Lenovo is now flourishing as it continues to supply businesses with the critical IT infrastructure and work-from-home products needed. Lenovo’s recent growth during the coronavirus pandemic isn’t by sheer luck. In fact, Lenovo pivoted in early 2020 to bolster its manufacturing strategy to make it arguably unmatched in the industry.
Lenovo owns many manufacturing facilities across the globe—from China and India to Mexico and North Carolina. Because of this, Lenovo was one of the ﬁrst to get a taste of just how impactful the coronavirus would be on the global supply chain when it was forced to temporarily close its facility in Wuhan, China, before COVID-19 spread across the globe.
“We realized, ‘Wow, this is going to be a big mess. We better start planning for the worst.’ So we began to really architect our supply chain so we can build anywhere and ship anywhere,” said Wilfredo Sotolongo, chief customer officer for Lenovo’s Data Center Group, in a recent interview with CRN. “That gave us an incredible competitive advantage because it’s no secret that my two top competitors had very serious supply chain constraints through the pandemic. That opened doors for us, not only with customers, but also with partners.”
Starting in January, before the coronavirus had fully stretched its deadly grasp across the world, Lenovo created the customer-centric motto, “Act as if life depends on us. Because it does.”
“We had dozens of customer situations, mostly hospitals and health ministries, who contacted us in crisis because they were not set up for remote workers or the volume of patients they were getting through the system,” said Sotolongo. “We started saying inside Lenovo, ‘Act as if life depends on us. Because it does.’ It changes your demeanor.”
Although Lenovo reported strong second-quarter earnings late Monday night, the company’s stock is only up 1 percent Tuesday at around $13 per share.
Despite the global COVID-19 pandemic, Lenovo has a positive outlook for the second half of its fiscal year as the new remote workforce and learn-from-home model are driving growth trends in devices and cloud infrastructure requirements.
“We will continue to leverage our core competencies of operational excellence and global/local footprint, while accelerating our service-led transformation to better grasp opportunities and drive sustainable growth,” said Yang.