“Lenovo buoyant in tough times for PC makers,” reads the headline on a review of Lenovo from closely watched Fitch Ratings.
At Citi, Lenovo shares are to to “Sell” from “Buy.”
So far, Citi must be carrying more weight as its analysis anf that from other firms hammers the PC industry following dismal first-quarter sales reports from research firms Gartner and IDC.
Despite data that showed Lenovo holding its own or growing slightly while the rest of the big PC players took hits, Lenovo shares fell nearly 12 percent over the past two days at the Hong Kong exchange.
If you don’t like the number “666,” and own Lenovo shares, then cringe.
Lenovo closed Friday at $6.66 in Hong Kong dollars, down 6.1 percent. Shares fell 5.8 percent on Thursday. (Hong Kong dollars are worth 16 U.S. cents.)
The Wall Street Journal noted that Lenovo has in fact reaped support from some firms.
“While quite a few analysts recommended accumulating Lenovo shares on weakness, Citi cut the stock straight to a non-consensus Sell from Buy, and also cut the target price to HK$6.50 versus HK$7.80,” The Journal reported.
Citi is especially concerned about the state of the PC business in China where tablets are increasing in popularity – just like everywhere else.
But earlier this week in Raleigh, numerous Lenovo executives, including Chairman and CEO Yang Yuanqing, went out of their way to tell employees that the company is moving aggressively to embrace tablets as well as smartphones.
A Different View from Fitch
The Fitch view of Lenovo remains very positive in a report issued in Hong Kong on Thursday.
“Fitch Ratings expects China’s Lenovo Group Limited (Lenovo) to continue to perform well in what is likely to remain tough times for most PC makers. Lenovo was the only top-five PC manufacturer to achieve growth in both worldwide and US PC shipments during the January-March 2013 quarter (Q113),” Fitch said.
“Lenovo’s strong brand power in China, improving position in overseas PC markets and rising smartphone market share are key differentiating factors in an industry that continues to face a number of headwinds including anemic economic growth in developed markets and ongoing substitution by tablets and smartphones.
“According to IDC data, Lenovo’s level of shipments held steady year-on-year (yoy), cementing its number two position with a 15% global market share. In contrast, market leader Hewlett-Packard Company’s (A-/Stable, 16% share) unit shipments declined 24% yoy. Global PC unit shipments fell 14% yoy to 76.3 million during Q113, marking the fourth consecutive quarter of decline and the steepest since IDC began publishing PC shipment data in 1994.
“Lenovo’s revenue grew robustly (18% yoy) for the nine months to December 2012 period with the company gaining market share in every geography. During this period profits and profit margins increased, contrasting with declines reported by competitors. Notably Lenovo’s share of the Chinese smartphone market increased to 12.3% in Q412 from 7.6% in Q411, ranking second behind Samsung Electronics Co., Ltd. (A+/Stable).”
Even Yang went told his Lenovo “team” that the PC industry faces turbulence in the coming year. But so far at least Fitch remains in Lenovo’s corner.
[LENOVO ARCHIVE: Check out eight years of Lenovo stories as reported in WRAL Tech Wire.]
