The news just isn’t getting much better for Lenovo.
Legend Holdings, the parent of Lenovo, is prepping for an IPO, according to the Wall Street Journal. But the latest sales forecast from research firm IDC can’t help share value. IDC says PC sales are heading down, and Lenovo is the world’s largest PC manufacturer.
Lenovo is already dealing with another back eye from its adware fiasco.
Legend, which is Lenovo’s largest shareholder and is the original group from which Lenovo began, is looking to launch the IPO in July, the WSJ reported Monday, citing “people with direct knowledge of the deal.” (Legend was Lenovo’s original name in China.)
“Beijing-based Legend Holdings Corp., one of the country’s oldest state-linked conglomerates, is planning to submit an application seeking listing approval to Hong Kong’s stock exchange in coming weeks,” the newspaper said.
Whether Lenovo’s struggles to tamp down global criticism about the adware gaff last month and the hacking of its own website might hurt Legend remains to be seen. But the diversification strategy of Lenovo Chair and CEO Yang Yuanqing over the past two years certainly WILL help.
As WTW has reported in detail, Lenovo’s x86 server buy from IBM and its deal with Google for Motorola are boosting Lenovo sales in both servers and smartphones.
But PC sales remain the bread-and-butter, as Yang describes it.
IDC revised its sales projections for 2015 and beyond, saying sales will drop by nearly 5 percent this year. That’s up from an early 3.3 percent drop. IDC did at least raise forecasts “slightly” for 2016 and 2017.
“Fourth quarter 2014 (4Q14) results were 1.7% ahead of forecast, but economic and product changes will create a head wind in the short term,” IDC reports.
“Total 2015 volume is projected at 293.1 million PCs, slipping a little further to 291.4 million in 2019. In value terms, the PC market reached US$201 billion in 2014, a decline of -0.8%, and is expected to fall another -6.9% in 2015 with smaller declines in subsequent years bringing the total to US$175 billion by 2019.”
Chip manufacturer Intel also cut forecasts last week, citing declining PC sales.
IDC cites the strengthening dollar as a reason for the decline. But Microsoft is expected to cut back subsidies to manufacturers, thus helping drive up prices.
Tablet sales have cooled, but IDC also warns that consumers are continuing to “shift to slim, convertible, and touch-based systems. Furthermore, while recent processor updates have generated positive reception, more significant product refreshes from the likes of Intel (Skylake platform) and Microsoft (Windows 10) will be released later in the year, shifting OEM product updates and consumer interest toward later in 2015.”
Jay Chouce, a senior research analyst at IDC, says PC makers are adjusting to changing demands, especially in mobile, but much work remains to be done.
“Fortunately for PC makers, tablet growth has slowed,” he said in a statement. “The PC ecosystem has also begun to see some fruits from efforts to narrow the divide between the PC and mobile devices in terms of both user experience and price points. Nevertheless, much more needs to be done as advances in both hardware and software are expected to benefit an ever wider spectrum of form factors, such as 2-in-1 devices that will further siphon volume from notebooks.”
PC sales dipped 2.2 percent last year.