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Lenovo Profits Sink 75% As PC Demand Continues Nosedive - Slashdot
source link: https://slashdot.org/story/23/05/25/0326210/lenovo-profits-sink-75-as-pc-demand-continues-nosedive
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Lenovo Profits Sink 75% As PC Demand Continues Nosedive
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Lenovo, the world's largest PC maker, is facing a significant decline in revenue and profit due to decreased demand for personal computers in a post-pandemic world. According to The Register, the company "reported (PDF) revenue of $12.635 billion for Q4 of its fiscal 2023 ended March 31, down a brutal 24 percent year-on-year. Pre-tax profit was down 75 percent to $130 million on the back of workforce restructuring charges." From the report: The Intelligent Devices Group -- the PC and smart gadget division -- was most devastated by shifting buying patterns: revenue fell to $9.79 billion versus $14.69 billion a year earlier, a 33.3 percent decline, and one that may mark a bottoming out of shipments. [...] According to Gartner, PC shipments declined 30 percent to 55.154 million across the industry in calendar Q1, which tracks with Lenovo's Q4. Vendors used discounts to drive sales.
In its previous quarter, Lenovo reported its first profit decline in three years and hatched a plan to save $850 million in annual overheads. One of the levers was cutting jobs. During this latest quarter, it recorded a one-time restructuring charge of $249 million. Lenovo is trying to emphasize other divisions to seek out higher growth in areas including servers and tech services.
The Infrastructure Solutions Group grew to $2.2 billion in the latest quarter, up from $1.408 billion, selling servers and the like to SMEs, larger enterprises, and cloud service providers. The Solutions and Services Group, which includes managed services, grew to $6.66 billion for $5.441 billion a year earlier. For the full year, Lenovo revenues fell to 14 percent to $61.94 billion and it reported a profit before tax of $2.136 billion, down 23 percent. "By the end of this quarter or early next, the inventory digestion will come to an end so that the activation number and the shipment number will be more consistent," said Lenovo CEO Yanqing Yang.
In its previous quarter, Lenovo reported its first profit decline in three years and hatched a plan to save $850 million in annual overheads. One of the levers was cutting jobs. During this latest quarter, it recorded a one-time restructuring charge of $249 million. Lenovo is trying to emphasize other divisions to seek out higher growth in areas including servers and tech services.
The Infrastructure Solutions Group grew to $2.2 billion in the latest quarter, up from $1.408 billion, selling servers and the like to SMEs, larger enterprises, and cloud service providers. The Solutions and Services Group, which includes managed services, grew to $6.66 billion for $5.441 billion a year earlier. For the full year, Lenovo revenues fell to 14 percent to $61.94 billion and it reported a profit before tax of $2.136 billion, down 23 percent. "By the end of this quarter or early next, the inventory digestion will come to an end so that the activation number and the shipment number will be more consistent," said Lenovo CEO Yanqing Yang.
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