Lenovo shows its profit reduction, but stock prices are rising

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Lenovo shows its profit reduction, but stock prices are rising
May 25
11:03 2017

The world’s largest PC maker, the Chinese giant Lenovo, reported a 41% decrease in profits in the last quarter of the financial year.

The press release says that for the first three months of 2017 the profit has amounted to $ 107 million, which is $ 73 million less than for the same period in 2016. Revenues have grown by 5% (in absolute terms – by $ 0.45 billion) and amounted to $ 9.58.

If we estimate the financial year as a whole, the profit of the Chinese giant has amounted to $ 535 million (last year a loss of $ 128 million was recorded, primarily due to restructuring costs). In comparison with the previous year the annual revenue figures fell by 4% and amounted to $ 43.04 billion.

Currently, Lenovo’s share in the sale of smart phones in the global market is 3.5%. This is the result of the efforts of the company’s management that managed to increase the annual sales of smart phones by 22%. At the same time, PC provision fell to 55.7 million ( by 1%). Currently, the share of the global market in PC sales is approximately 21.5% that means that every fifth computer, being sold in the world, is produced by Lenovo.

The company’s revenues do not suit the company’s management, so it became known about the new planned restructuring. Director General Yang Yuanqing reported about it a few weeks ago in the Weibo social network. It became known that the restructuring means primarily a division into two global subdivisions: B2C (production of computers and various gadgets for consumers) and B2B (providing data management services for companies).

Positive news caused the growth of Lenovo shares by 5.1%, the positive trend will continue.

 

The material was prepared with the participation of  Marina German,
a leading analyst of the brokerage company CT Trade

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