Lenovo said its mobile unit “performed as expected” during the quarter to 31 December 2017, while acknowledging it “takes a long-term view of this business”.
The vendor acknowledged it will not break even in the current quarter, which had previously been a target, Reuters reported.
Revenue for the mobile unit, which sells devices using the Lenovo and Motorola/Moto brands, was down 5 per cent year-on-year to $2.1 billion. Latin America was a plus point, with 37 per cent revenue growth and strong profitability, while the Moto brand is gaining in Europe, where shipments were up 23 per cent year-on-year.
Shipments in North America grew, driven by “initial success in mainstream models with carrier expansion during the quarter under review”, although it was acknowledged more work is needed to sharpen its position at the high-end.
Less positively, a slower brand transition in emerging EMEA markets and severe competition in APAC impacted overall shipments, which declined 18 per cent year-on-year. In its home market of China, Lenovo “continued to refine its product strategy to fit the local market for future growth”. Both revenue and shipments declined.
For the three months, a pre-tax operating loss from the unit of $92 million was down from $112 million year-on-year. The company cited better expense control, although component cost increases continued to create pressure.
Revenue in Lenovo’s PC and Smart Devices unit grew 7.6 per cent to $9.3 billion, marking the fifth consecutive quarter of year-to-year revenue growth. It shipped 15.7 million PC units, flat year-on-year.
Pre-tax income of $416 million was down from $431 million in the comparable 2016 period.
On a group level, the company reported a loss attributable to shareholders of $289 million, compared with a profit of $98 million, having been hit by a $400 million charge related to US tax reforms.
Pre-tax income of $150 million, up 48 per cent, was said to mark the first year-on-year growth in five quarters, with revenue of $12.9 billion, up 6 per cent, the highest for three years.