Published in PC Hardware

Levono reports 24 per cent fall in revenue

by on17 August 2023

Prolonged PC slump

Lenovo posted a 24 per cent fall in revenue for the April-June quarter, due to what it called a prolonged slump in global demand for personal computers.

This is the fourth consecutive quarter of sales declines and the company reported a 14 per cent drop in annual profit for the year that ended in March, its first annual decline since 2019.

Revenue in the April-June quarter fell to $12.9 billion, below a $13.84 billion average of what Wall Street was expecting,

The COVID-19 pandemic greatly boosted electronics sales as consumers and companies alike stocked up or upgraded to accommodate a shift to remote work. However, revenue started contracting last year as demand began to fall, weighed down by rising interest rates and soaring inflation.

The pace of the recovery remains weak and many retailers still have unsold inventory, forcing PC makers and their suppliers, including chipmakers to adjust production volume and prices. Lenovo’s biggest woes though were its Chinese market.

Lenovo said that things were stabilising and should pick up next year. Lenovo's CEO Yang Yuanqing was confident in China's fundamentals in the long term and encouraged by the government's current measures to stabilise the market and spur consumption.

To improve profit margins, Lenovo has been expanding non-PC businesses such as servers and information technology (IT) services, but its device business that includes PCs, smartphones and tablets still accounted for nearly four-fifths of group revenue.

Lenovo's infrastructure solutions business, which sells servers and other equipment, posted a surprising 8% revenue decline, its first quarterly decline in many quarters, which Yang said was partly due to an ongoing shortage of AI chips.

"(Cloud service providers) are shifting their demand from traditional computers to AI servers. But unfortunately, the AI server supply is constrained by the GPU supply," he said, referring to graphics processing units.

Last modified on 17 August 2023
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