Lenovo, its income driven up 20 percent over the past year due in part to $5 billion in acquisitions to record levels, didn’t deliver on the amount of profit financial analysts had forecast in its annual financial report issued early Thursday.
The world’s No. 1 PC manufacturer, which operates its global executive headquarters in Morrisville and its primary headquarters in Beijing, said revenues climbed 20 percent to $46.3 billion for the fiscal year ending March 31.
The company said earnings totaled $829 million.
However, analysts had expected $857 million, according to wire reports.
Lenovo invested heavily in 2014, paying $2.9 billion for the Motorola Mobility mobile phone business from Google and $2.1 billion for the x86 server business of IBM. The server group is now part of a larger Lenovo operation based in RTP. Motorola remains headquartered in Chicago and operates as a Lenovo subsidiary.
Just last week, Lenovo cut 235 jobs in its server business with most of those layoffs (165) taking place in RTP.
Earlier this year, Lenovo also offered buyouts to an undisclosed number of workers.
Lenovo chair and CEO Yang Yuanqing put a positive spin on the annual performance. (He also spelled out Lenovo’s latest “attacking” strategy: Targeting the mobile social Internet.)
“Lenovo continues to deliver strong and balanced performance. Building on our newly acquired businesses and consistent organic growth of our core operations, three growth engines have been formed,” Yang said in a statement.
Yang has made it a primary goal of the company to diversify away from reliance on PC sales, thus the moves into expanded server and smartphone businesses.
“While our Mobile Business Group and Enterprise Businesses Group grew rapidly, our PC business delivered even stronger results, with record market share and increased profitability,” Yang said.
Lenovo now owns some 20 percent of the global PC market share. In the fourth quarter, Lenovo’s PC shipments increased 3 percent to 13.3 million even as global PC sales shrank.
“The integrations of Motorola Mobility and System x businesses are on track and realizing good growth momentum, although further time will be required to develop them before they become core businesses like PCs, ” he added.
Smartphone sales hit a record 76 million, but analysts have reported that Lenovo shipments declined in the first quarter of this year.
The server group reported a $45 million loss, including costs related to the x86 deal. Lenovo is No. 3 in server sales thanks in large part to the IBM group acquisition.
Yang has said he expects those units to return to profitability in 2016.
The company will host a global technology conference in Beijing next week, and it is expected a series of new products will be introduced. Yang’s diversification is focused on what he calls the “Internet+” (plus) era, what is more commonly called the “Internet of Things.”
“In view of the opportunities and challenges of the new Internet+ era, we are ready to transform ourselves from making mostly hardware to a combination of hardware and software services,” Yang said. “This will spur a new wave of growth for Lenovo in the coming years.”