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‘Although external challenges may persist in the short term, the digitalization trend continues to accelerate, and the hybrid work model is here to stay. We have confidence in capturing these opportunities and will continue to invest, innovate and deliver sustainable growth and profitability improvements,’ said Lenovo CEO Yang Yuanqing on the company’s fiscal first-quarter 2022 earnings call.
Lenovo Wednesday logged its slowest revenue gains in nine quarters as the new normal impacts a pandemic PC boom that saw record sales.
Still, the PC powerhouse posted steady results with fiscal first-quarter 2022 revenue up 0.2 percent year over year to just shy of $17 billion—the smallest increase since March 2020. Much of that growth can be attributed to the company’s plan to focus on non-PC businesses like smartphones, servers and IT services, which accounted for 37 percent of revenue.
Marc Harrison, president of Morganville, N.J.-based Lenovo partner Silicon East, said the results were positive amid the current economic climate.
“Considering the supply chain constraints from the first half of this year, Lenovo has done an admirable job of actually growing their business,” he said.
Lenovo CEO Yang Yuanqing touted the company’s diversification in product and service offerings. “We successfully grew our business and improved profitability for the ninth consecutive quarter,” he said in a release. “These are the results of our strategic foresight and strong execution, together with our operational resilience.”
Yang went on to acknowledge supply chain difficulties and macroeconomic hurdles that have slowed the entire technology sector in 2022. “Although external challenges may persist in the short term, the digitalization trend continues to accelerate, and the hybrid work model is here to stay. We have confidence in capturing these opportunities and will continue to invest, innovate and deliver sustainable growth and profitability improvements.”
Earnings reports from major technology firms this year have shown at best a cooling off and at worst what economists fear is the beginning of a prolonged recession sparked by global inflation and continued supply chain difficulties.
During an earnings call with investors, Lenovo CFO Wai Ming Wong said the PC business declined 3 percent on the quarter because of “weak consumer PC demand and the COVID-led supply chain constraints.”
Yang told Reuters that he expects this year’s global PC shipments to be between 300 million units and 310 million units, marking a 10 percent drop from the 340 million units shipped last year as reported by research firm IDC.
Supply chain shortages have dogged the industry for two years and spiked this spring with China COVID-19 lockdowns in major manufacturing areas. But the CEO also told Reuters those slowdowns were beginning to ease. “In some areas, we are still facing a shortage, particularly in the data center business,” he said. “But generally speaking, I’m not seeing significant challenges in the second half of this year.”
Lenovo reported net income attributable to shareholders at $516 million, an increase of 11 percent. Lenovo shares on the Hong Kong Stock Exchange were trading slightly down Wednesday.