Science & Technology

Lenovo Reports Quarterly Earnings

For the third quarter in a row, Lenovo has published information on financial performance that exceeds preliminary expectations.

Lenovo Reports Quarterly Earnings

Revenue of the mentioned firm for January-March of the current year amounted to $13.83 billion. This indicator increased by 9% compared to the result for the same period in 2023. At the same time, analysts interviewed by the media predicted that the company’s revenue for the last quarter would be fixed at $ 13.1 billion.

The company’s net income for January-March of the current year amounted to $248 million. This indicator increased by 118% compared to the result for the same period in 2023. At the same time, analysts interviewed by the media expected that the company’s net income for the last quarter would be $158.4 million.

Lenovo’s infrastructure solutions unit, which provides servers and network equipment to businesses, recorded revenue of $2.5 billion in January-March 2024. This indicator grew by 15% year-on-year. It is worth noting that the mentioned figure is a record. This result is largely due to an increase in customer investments in artificial intelligence.
At the same time, Lenovo announced a shortage of machine intelligence accelerators and reduced spending for other server equipment. However, the company notes that the supply gap is demonstrating signs of narrowing.

IDC data show that in January-March 2024, worldwide shipments of Lenovo personal computers amounted to 13.7 million units. This indicator grew by 7.8% compared to the result of the same period of the last year. Currently, the company’s share of the global PC market is 23%, which is the highest figure among other manufacturers of similar devices.

The Chinese market, which recorded the highest level of consumer demand for personal computers, remains problematic for now, including for Lenovo. At the same time, the integration of artificial intelligence technologies into PCs that have already begun may become a factor that will improve the mentioned state of affairs.

IDC Research Manager Jitesh Ubrani is convinced that in 2024 the personal computer market will be on a recovery trajectory. According to the expert, the realism of this scenario is because sales of new PCs with artificial intelligence will be launched at the end of the current year. Jitesh Ubrani also says that the recovery of the personal computer market this year may also be because commercial buyers will start updating devices that they purchased during the coronavirus pandemic period. Moreover, the expert says that PCs with artificial intelligence will cost more, which will provide additional opportunities for manufacturers of relevant products and components.

Lenovo was one of the first companies to introduce personal computers with AI. In this case, it means a new category of laptops and desktops with additional artificial intelligence functions. The corresponding devices are powered primarily by Windows software from Microsoft. Analyst Cecilia Chan says that the appeal of personal computers with artificial intelligence has yet to be proven. The expert noted that in the long term, starting next year, the corresponding devices may become a new growth factor.

The electronics industry has largely recovered from the downturn seen in 2023 when smartphone and computer manufacturers faced excessive inventory and weak consumer demand. Suppliers, including chip producer Taiwan Semiconductor Manufacturing Co., expect that during the current year, shipment volumes will gradually increase.

Analysts Steven Tseng and Sean Chen say that the recovery of Lenovo’s personal computer business and the expansion of its service sector in the next few years may be factors in increasing sales and margins. According to them, in the coming quarters, the company’s sales growth may accelerate due to the normalization of commodity inventories and the upward dynamic of consumer demand. Analysts also say that Lenovo’s rising contribution to the service business may lead to increasing margins. Separately, they noted that the company’s data center segment is promising in the long term amid the growing popularity of generative artificial intelligence.

Morgan Stanley analysts said in a note to clients that Lenovo is likely to be the main beneficiary of the expected boom in AI-powered personal computers in Asia. According to them, currently, the share of the mentioned devices in the market of the specified products is less than 5%, but by 2028 this figure will grow to more than 60%.

While speaking to the media this week Lenovo CEO Yuanqing Yang said that the arrival of personal computers with artificial intelligence will drive the PC replacement cycle.

As we have reported earlier, Lenovo and Alibaba Cooperate to Build AI Computers.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.