China's top personal computer vendor, Lenovo Group Ltd, struggling to improve its balance sheet since taking over IBM's PC arm, returned to profit in the fourth fiscal quarter.
The world's third-biggest PC maker posted a net profit of US$161 million for 2006-2007 fiscal year, a strong year-on-year increase of 625 percent. Full-year revenue was US$14.6 billion, up by 10 percent.
The company's net income was US$60 million in the three months ended on March 31, compared with a US$116 million loss a year earlier, which included US$70 million expenditure in internal restructuring.
Its worldwide PC shipments grew more than 17 percent, well ahead of the industry average of approximately 11 percent, helping it eat into the market share of Hewlett-Packard and Dell in Asia.
"It was a solid quarter and a strong fiscal year by any number of measures. Our performance confirms we have not only stabilized our business worldwide, but also that our focus on emerging markets is beginning to reap very positive results," said Lenovo's chairman, Yang Yuanqing.
"Lenovo posted gains in market share, revenue and profit in both the notebook and desktop segments as well as in all our operating geographies, with the Americas business returning to profitability."
The PC giant, which has been aggressively seeking ways to curb expenditures, said earlier that it will try to lay off 1,400 employees, accounting for 5 percent of the workforce, hoping to save about US$100 million this fiscal year.
It will shift some 750 jobs to countries with lower labor costs and which are emerging markets for the company.
This is the second round of job losses since Lenovo acquired IBM's PC business. The move will cost US$50 million to US$60 million before taxes.
The company moved its headquarters to Raleigh, North Carolina, after taking over IBM's PC unit in 2005. PC sales in China, the world's second-biggest market, account for 36 percent of Lenovo's total revenue and are expected to rise 21 percent to US$19 billion this year.
Lenovo, which used to be known as Legend in its home market, is ranked the biggest and most successful PC vendor in China. It is one of the handful of Chinese companies making overseas acquisitions to craft an international brand name.
According to a recent report by US consulting firm IDC, Lenovo had a 17.8 percent PC market share in Asia, excluding Japan, in the first quarter of 2007, compared with 16.8 percent a year earlier. HP had a 15.4 percent share, followed by Dell, with 8.1 percent. Analysts said the result beat their expectations.
(China Daily May 24, 2007)