Lenovo’s quarterly revenue drops due to PC demand decline in China.

Lenovo Revenue Falls 24% as PC Demand Slumps

By Josh Ye

HONG KONG (Reuters) – Lenovo’s fourth quarter revenue fell 24% and it cut 8% to 9% of its workforce, the Chinese group said on Wednesday, as demand for personal computers (PCs) continued to slump.

The world’s largest PC maker said revenue for the January-March period was $12.63 billion, marking the third consecutive quarterly fall. Lenovo’s result compared with a $12.74 billion average of eight analyst estimates compiled by Refinitiv.

For the full year through March, Lenovo said its revenue shrank 14%, marking the first annual decline since 2019.

To improve profit margins, Lenovo has been expanding non-PC businesses, such as in 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.

PC Demand Expected to Recover in Second Half of Year

The COVID-19 pandemic gave a huge boost to electronics sales as consumers and companies alike stocked up on or upgraded existing gear to accommodate a shift to remote work. However, revenue started contracting last year as demand began to fall. For the previous quarter, Lenovo reported a decline in revenue of 24%, its steepest in 14 years.

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, showed data from researcher IDC.

Chief Executive Yang Yuanqing said in an interview that he expects PC demand to recover in the second half of the year. “By the end of this quarter or early next quarter, the inventory digestion will come to an end so that the activation number and the shipment number will be more consistent”.

Lenovo Shares Fall 3.7%

Overall net income attributable to shareholders fell 72% to $114 million versus analysts’ $212.49 million estimate. Lenovo shares fell 3.7% before the earnings results were released, compared with a 0.94% benchmark index drop.

(Reporting by Josh Ye; Editing by Christopher Cushing, Louise Heavens and Alexander Smith)