Lenovo’s revenue falls but tech giant reports profit, says AI efforts paying off

MORRISVILLE – Lenovo‘s revenues fell again in its most recent quarter but the tech conglomerate remained profitable and beat estimates from analysts despite a continuing slow market for personal computers in which it is the global sales leader.

Revenues fell some 16% year-over-year to $14.4 billion but earnings were still positive at $273 million or $2.09 per share. However earnings were down 54%. Analysts expected $14.5 billion, according to Reuters.

“Last quarter, despite macro challenges, we saw clear signs of recovery across the technology sector,” said Chair and CEO Yang Yuanqing in a statement. “Thanks to our strong execution, operational excellence, and continuous investment in innovation, we delivered consecutive quarter-on-quarter performance improvements, indicating an encouraging trajectory to recovery.”

Through October, PC sales worldwide were down more than 7% year-over-year according to data from research firms IDC and Gartner. However, Lenovo has increased its market share.

How Lenovo’s PC group is doing

Lenovo graphic

PC sales keep dropping – but global leader Lenovo increases market share

To counter the PC decline, Lenovo has stepped up investing in artificial intelligence – and Yang said that decision is paying dividends.

“With continuous execution of our intelligent transformation strategy, and with our AI ecosystem and partnership further strengthened, we will leverage our full-stack AI capabilities from pocket to cloud to enable hybrid AI applications for every enterprise and every individual, ultimately driving sustainable growth for our business,” he said/

Yang announced recently that the company would invest an additional $1 billion in AI initiatives across a variety of services and hardware.

Triple cloud-AI play: Lenovo, VMware, NVIDIA partner to offer ‘turnkey’ services

Lenovo also has diversified away from reliance on PC sales by providing additional services. That business group, known as SSG or Solutions and Services Group, delivered “record” results, the company reported:

• “SSG broke records in the second quarter for both revenue and profit, with revenue of US$1.9 billion and an operating margin of 20%.
• “Support services and software were the core profit engine for the SSG group.
• “Managed services and project and solutions services further expanded in the second quarter, together now making up 56% of SSG’s revenue, up three points year-on-year.”

Lenovo maintains dual headquarters in Morrisville and Beijing. It employs thousands of people across North Carolina.