Lenovo admits mobile weakness, as China volumes shrink - Mobile World Live

Lenovo admits mobile weakness, as China volumes shrink

26 MAY 2016

Lenovo said that in its Mobile unit, “integration efforts did not meet expectations”, as it failed to capitalise on its earlier acquisition of Motorola Mobility.

While there were positives – the company said that for the full year, markets outside China saw a “robust” 63 per cent growth in smartphone shipments to reach 51 million – volume in its home market declined 85 per cent “as the business shifted focus to open market and higher price bands”.

It also said that its product transition in North America was “not successful”.

Total smartphone shipments for the year stood at 66.1 million, compared with 76.3 million units in the prior year.

The company has slipped out of the top five global smartphone makers.

“Lenovo has learned a great deal since the close of the Motorola acquisition and is applying learnings quickly, with actions in organisation, leadership and approach,” it said.

The company has adopted a structure with two co-presidents for its mobile unit, focusing on China and the rest of world, and reflecting the differences between the two markets. The company also announced a major restructuring effort in the first half of the financial year.

In China, it is looking to “return to growth there by continuing to drive the shift from carriers to open market and leveraging its ZUK brand to rebuild its end-to-end competitiveness”. But this has led to a volume drop in the interim.

And for RoW, it will “maintain high growth in emerging markets and get the US business back on track with a competitive product portfolio”.

“I am confident that we will get this business back to profitable growth,” Yang Yuanqing, CEO, said.

With regard to tablets, Lenovo said it “outpaced the market and continued to grow with nearly 11 million units shipped, and 5.4 per cent market share”.

Financials
Reported Q4 pretax loss for the Mobile unit was $105 million, compared with a loss of $218 million in Q4 fiscal 2015, on revenue of $1.7 billion.

Reported full-year pretax loss for the Mobile unit was $644 million, compared with $370 million loss in FY2015, on revenue of $9.8 billion, up from $9.1 billion.

On a group level, the company reported a Q4 profit of $180 million, an 80 per cent year-on-year increase, on revenue of $9.13 billion, down 19 per cent.

It said that it “strengthened its core PC business, enhanced its cost structure and protected its profit, despite facing internal and external challenges that impacted revenue”.

For the full year, it saw a net loss of $128 million, on revenue of $44.9 billion, down 3 per cent.

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