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Lenovo Q1 Revenue Jumps 20%, Beats Estimates as PC Market Recovers

An employee gestures next to a Lenovo logo at Lenovo Tech World in Beijing, China November 15, 2019. (Reuters)
An employee gestures next to a Lenovo logo at Lenovo Tech World in Beijing, China November 15, 2019. (Reuters)
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Lenovo Q1 Revenue Jumps 20%, Beats Estimates as PC Market Recovers

An employee gestures next to a Lenovo logo at Lenovo Tech World in Beijing, China November 15, 2019. (Reuters)
An employee gestures next to a Lenovo logo at Lenovo Tech World in Beijing, China November 15, 2019. (Reuters)

China's Lenovo Group reported a 20% rise in quarterly revenue on Thursday, as the global personal computer market showed signs of recovery after a two-year slump.

For the three months ending in June, the company's revenue rose to $15.4 billion, above the average estimate of $14.1 billion expected by analysts polled by LSEG.

This marks a third consecutive quarter of revenue growth for Lenovo after it suffered five straight quarters of revenue declines amid the post-COVID slowdown.

The global personal computer market has shown signs of recovery, with IDC data indicating a return to growth during the first quarter of this year after nearly two years of declines.

For the three months ended June, global PC shipments rose by 3% to 64.9 million units. Lenovo maintained its position as the market leader, holding a 23% market share, according to IDC.

Lenovo's shares down 0.99% in Thursday afternoon trading.

Lenovo has diversified beyond its core PC business, expanding into software and services in recent years.

The company's infrastructure solutions group, which includes servers and other hardware, grew 65% to $3 billion in revenue. Its solutions and services group grew 10% to $1.9 billion for the quarter.

Currently its non-PC business already made by 47% of its revenue mix and company chairman and CEO Yuanqing Yang told Reuters in an interview that this share will grow to 50% in the near future.

Yang said a resurgence in IT spending by businesses and AI-driven demand will boost the company's business lines across the board, including PCs, servers, and enterprise software.

The PC market is being fueled by the emerging trend of "AI PCs" - computers equipped with specialized chips optimized for AI software.

Lenovo, among the first to unveil AI PCs, launched two models in May. Yang projects 10% of Lenovo's shipped PCs will be AI PCs by year-end, potentially rising to 50-60% by 2026.

The AI boom coincides with rising China-US geopolitical tensions, including restrictions on advanced AI technology exports.

Yang said Lenovo was accustomed to such challenges and complies with regulations in all operating regions, enabling it to navigate these issues.

Lenovo's net income for the quarter was $243 million, above the average estimate of $222.94 million expected by analysts polled by LSEG.

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Technology

Sony Posts 10% Profit Rise on Image Sensor Boost

(FILES) In this picture taken on May 9, 2022, the Sony logo is displayed at an entrance of the company's headquarters in Tokyo. (Photo by Philip FONG / AFP)
(FILES) In this picture taken on May 9, 2022, the Sony logo is displayed at an entrance of the company's headquarters in Tokyo. (Photo by Philip FONG / AFP)
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Sony Posts 10% Profit Rise on Image Sensor Boost

(FILES) In this picture taken on May 9, 2022, the Sony logo is displayed at an entrance of the company's headquarters in Tokyo. (Photo by Philip FONG / AFP)
(FILES) In this picture taken on May 9, 2022, the Sony logo is displayed at an entrance of the company's headquarters in Tokyo. (Photo by Philip FONG / AFP)

Sony on Wednesday reported a 10% rise in operating profit in the April-June quarter, beating analyst estimates, boosted by its industry-leading image sensor business.
Profit at the Japanese tech and entertainment conglomerate was 279 billion yen ($1.90 billion), compared with an average estimate of 275 billion yen from seven analysts polled by LSEG.
The impact from foreign exchange and higher sales helped profit at the image sensor business, a major supplier for smartphone makers, roughly triple to 36.6 billion yen.
A sprawling group encompassing music, movies, games and chips, Sony hiked its full-year profit forecast by 3% aided by foreign exchange rates.
Financial markets have been whipsawed in recent days following an interest rate hike by the Bank of Japan and weak labor data from the US that stoked recession fears.
"We are extremely concerned about the sudden fluctuations in exchange rates and possibility of economic downturn, particularly in the United States," Sony President Hiroki Totoki told an earnings briefing, according to Reuters.
The rise in the yen has left investors reassessing the outlook for Japanese multinationals, as the weak currency had provided a cushion for many heavyweight exporters.
Sony's assumed exchange rate for the year is approximately 145 yen to the dollar. On Wednesday, it was trading around 147, but it had been at 38-year lows near 162 at the start of July.
In the first quarter Sony sold 2.4 million PlayStation 5 (PS5) units, fewer than a year earlier, but booked a larger profit from its games business.
The group said in May it expects to sell 18 million PS5 units this fiscal year, compared to 20.8 million a year earlier.
The games industry is grappling with rising costs and weak pricing power. Sony-owned developer Bungie announced last week it is cutting almost a fifth of its workforce.
Sony's shares closed flat ahead of earnings and are down 8% year-to-date, giving the company a market capitalization of just over $100 billion.