HONG KONG - Saturday, February 15th 2014 [ME NewsWire]
Strong execution, innovative products and PC Plus growth drive another record setting quarter
Record 32.6 million total units shipped, nearly 5 devices per second
Continued to expand lead as number one PC maker with 18.5% market share
New PC Plus products excite consumers and drive growth
US$10.8 billion in revenue; passing US$10 billion milestone for first time ever
Records of US$321 million in pre-tax income and US$265 million in earnings
Basic EPS of 2.56 US cents, or 19.85 HK cents
Net cash reserves of US$ 3.4 billion (as of December 31, 2013)
(BUSINESS
WIRE)-- Lenovo Group today announced record results for its third
fiscal quarter ended December 31, 2013, driven by strong global
execution, an innovative product portfolio and an increasing mix of PC
Plus revenues. Quarterly revenue was US$10.8 billion, a 15 percent
increase year-over-year, passing the US$10 billion milestone for the
first time ever. Third quarter profit grew even faster with pre-tax
income increasing 30 percent year-over-year to US$321 million, while
earnings also grew 30 percent year-over-year to US$265 million. Lenovo
shipped a record 32.6 million devices in the quarter or nearly 5 devices
every second. Lenovo’s third quarter mix of sales from its Mobile
Internet and Digital Home division which develops PC Plus products such
as smartphones, tablets and smart TVs, was 16 percent of total revenues,
up from 11 percent one year ago and seven percent two years ago, with
steadily improving profitability.
For the third straight quarter,
Lenovo was the world’s largest PC vendor*, with its highest-ever
quarterly market share of 18.5 percent, up 2.4 points year-over-year.
Record high share in EMEA, Asia Pacific and China with number one
positions in five of the seventh largest PC markets globally – supported
this strong performance. Lenovo’s PC shipments for the third fiscal
quarter were 15.3 million units, again making it the fastest growing of
the top five PC vendors. This was also the 19th quarter in a row that
Lenovo outperformed the industry as a whole, growing at a 14 point
premium to the market.
Also for a third straight quarter,
Lenovo’s combined shipments of smartphones and tablets – 17.3 million
devices – surpassed the 15.3 million PCs it sold. It also continued to
be the world’s fourth largest smartphone supplier with 4.8 percent
share, growing shipments 47 percent year-over-year, driven by excellent
performance of its smartphone launches in a number of new markets. In
tablets, Lenovo had a record high of 3.4 million shipments, up over 300
percent year-over-year. Tablet strength was driven by the launch of the
Yoga Tablet, the world’s first multimode tablet. Together, these results
clearly illustrate Lenovo’s PC Plus transformation.
“Lenovo had
outstanding performance last quarter, delivering both record revenue and
record profit. Leveraging strong execution of our strategy, innovative
products and growth in our PC Plus business, we continue delivering on
our commitment to improve our profitability and we are confident we will
maintain this momentum in our existing businesses,” said Yang Yuanqing,
Chairman and CEO of Lenovo. “Further, the Motorola and IBM server
acquisitions that we just announced are a perfect fit with our PC Plus
strategy. While our top priority now is full participation in the
regulatory approvals process, I am confident that from day 1 after
closing, these businesses will quickly begin contributing to our
performance and develop into pillars for long-term, sustainable growth.”
The
Company’s gross profit for the third fiscal quarter increased 15
percent year-over-year to US$1.36 billion, with gross margin at 12.6
percent. Operating profit for the quarter grew 37 percent year-over-year
to US$334 million. Basic earnings per share for the third fiscal
quarter was 2.56 US cents, or 19.85 HK cents. Net cash reserves as of
December 31, 2013 totaled US$3.4 billion.
GEOGRAPHIC OVERVIEW
Lenovo’s
China geography totaled US$4 billion in revenue in the third fiscal
quarter, relatively stable year-over-year, accounting for 37 percent of
the Company’s worldwide revenue. The performance of China reflected a
temporary slowdown in the local PC market which has stabilized and is
seeing improved pricing, while urbanization, corporate refresh and PC
Plus product innovation are driving future demand. During the third
quarter, Lenovo further strengthened its PC number-one position in
China, with market share in China of 37.9, a 0.5 point year-over-year
gain, was number two in smartphones and number three in tablets.
In
the Asia Pacific geography, Lenovo’s revenue totaled US$1.6 billion for
the third quarter, or 15 percent of the Company’s worldwide revenue, up
22 percent year-over-year. Solid execution drove strong growth of
smartphone sales and tablets saw hypergrowth in ASEAN countries. Lenovo
also regained its number 1 position in PCs, with a record market share
of 15.9 percent, up 2.0 points year-over-year and reached a milestone of
selling 1 million smartphones.
Lenovo’s revenue in the
Europe/Middle East/Africa (EMEA) geography saw a 25 percent increase in
the third fiscal quarter to reach US$2.9 billion, representing 27
percent of Lenovo’s worldwide revenue. During the quarter, Lenovo
reinforced its strong PC number 2 position with PC shipments up 27
percent, outperforming the market by 33 percentage points by protecting
enterprise PC sales and attacking in SMB and consumer focused PC spaces.
Lenovo is now number one in 11 EMEA countries. Notably, EMEA also led
the way in driving tablet sales, increasing shipments nearly 450 percent
year-over-year.
The Americas geography revenue was US$2.3
billion for the third fiscal quarter, an increase of 36 percent
year-over-year, representing 21 percent of the Company’s worldwide
revenue. The Americas geography saw its PC shipments grow 28 percent, a
2.7 point share gain to reach 11 percent share, outperforming the market
by 31 percentage points. Performance in Brazil – driven by strong
management, scaling of a new plant and integration of CCE – resulted in
PC shipment growth of 378 percent to a record 18.6 percent market share
in the country. US commercial PC business continues to play a
significant role in the Americas geography, with shipments up 21 percent
YTY, and a 15 point premium to the market.
PRODUCT OVERVIEW
During
the third fiscal quarter, Lenovo’s Laptop computers were the largest
contributor to the Company’s revenue worldwide, generating 50 percent of
Lenovo’s total revenue. Across the industry, laptop shipments were down
6.3 percent year-over-year. Despite this challenging environment,
consolidated sales for Lenovo’s laptop PC business worldwide in the
third fiscal quarter totaled US$5.4 billion, an increase of 11 percent
year-over-year. The Company gained 2.7 share points and achieved a
market share of 18.8 percent. During the third fiscal quarter, the
Company announced the Lenovo A10, an affordable, ultra-portable,
dual-mode laptop and the Company’s first to run Android 4.2 OS. Weighing
less than 1kg and measuring just 17.3 mm at its thickest point, the
Lenovo A10 is one of the thinnest and lightest consumer laptops in the
market today.
Lenovo’s Desktop PC shipments grew 9.1 percent
worldwide year-over-year during the third fiscal quarter, compared to an
overall industry decrease of about 3 percent. As a result, Lenovo
gained 2 share points year-over-year and achieved a market share of 18
percent. Consolidated sales of Lenovo desktop PCs in the third quarter
increased by 12 percent year-over-year to US$ 3.2 billion, or 29 percent
of the Company’s total revenue. During the quarter, Lenovo announced
four new all-in-one desktop PCs, extending the Company’s lead in that
competitive product category. Featured was the super-widescreen Lenovo
B750, with its 29” display. According to IDC, Lenovo is number one in
the worldwide AIO market, across both the consumer and commercial
segments.
Consolidated sales of Lenovo’s Mobile Internet and
Digital Home (MIDH) products, including smartphones and tablets
increased 73 percent year-over-year during the third fiscal quarter to
US$ 1.7 billion, representing 16 percent of the Company’s total revenue
during the quarter. Tablet shipments grew by 326 percent year-over-year
for a record 3.4 million units with 4.3 percent market share. During its
third fiscal quarter, Lenovo announced its multimode Yoga Tablet
featuring three unique modes: hold, tilt and stand, giving consumers a
better way to use a tablet and an incredible 18 hours of battery life.
Yoga Tablet was announced at a livestream launch event with actor Ashton
Kutcher, who debuted as Lenovo’s newest product engineer. Also
announced in the third quarter was Lenovo’s Miix2 8-inch tablet, a
follow on from its popular predecessor, the Lenovo Miix Tablet.
LENOVO’S M&A TRACK RECORD AND RECENT ACQUISITIONS
Since
closing its acquisition of IBM’s personal computer business and
ThinkPad line in 2005, it has successfully managed six integrations
including the joint venture with NEC in Japan, the acquisition of Medion
in Germany, the acquisition of CCE in Brazil, the strategic partnership
and joint venture with EMC in the US, the acquisition of Stoneware in
the US and its joint venture with Compal in China. During this time,
Lenovo has become the world’s number one PC company, number 2 PC +
Tablet maker, number three Smart Connected Device maker, all while
growing revenue and profitability many times over.
Lenovo’s
recently announced investments in Motorola Mobility and the IBM server
business are logical next steps in the successful “PC Plus” strategy.
Upon close of the IBM server transaction, Lenovo will be the number 3
server player globally in a business with higher margins than PCs. With
Motorola’s close, Lenovo becomes a strong number three smartphone maker.
A range of cost saving and scaling opportunities, the iconic Motorola
brand and the opportunity to expand Motorola’s global reach will quickly
place this business on a path to tangible success. Upon close, Lenovo
firmly believes they will accelerate the geographical reach and
competitiveness of its existing smartphone, tablet and server
businesses, while ensuring future growth is even stronger and more
sustainable.
*see IDC data 4Q 2013
ABOUT LENOVO
Lenovo
(HKSE: 0992) (Pink Sheets: LNVGY) is a US$34 billion personal
technology company – and the largest PC company in the world, serving
customers in more than 160 countries. Dedicated to building
exceptionally engineered PCs and mobile internet devices, Lenovo’s
business is built on product innovation, a highly-efficient global
supply chain and strong strategic execution. Formed by Lenovo Group’s
acquisition of the former IBM Personal Computing Division, the company
develops, manufactures and markets reliable, high-quality, secure and
easy-to-use technology products and services. Its product lines include
legendary Think-branded commercial PCs and Idea-branded consumer PCs, as
well as servers, workstations, and a family of mobile internet devices,
including tablets and smart phones. Lenovo, a global Fortune 500
company, has major research centers in Yamato, Japan; Beijing, Shanghai
and Shenzhen, China; and Raleigh, North Carolina. For more information
see www.lenovo.com.
To view the full release including the table, please click here
Contacts
Lenovo Group
Hong Kong
Angela Lee, +852 2516 4810
angelalee@lenovo.com
Beijing
Eric Guo, +8610 5886 6114
guoty@lenovo.com
United States
Brion Tingler, +1 917 528 1992
btingler@lenovo.com
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