Lenovo Earns Small Profit in First Quarter

Lenovo Group Thursday reported a profit of US$5 million for its fiscal first quarter. The company managed to record a profit despite ongoing restructuring costs.

Fiscal first-quarter revenue rose 38 percent over the same period last year, to US$3.5 billion. The company’s profit attributable to shareholders during the quarter was US$5 million. The quarter included two months’ contribution from the former personal computing division of IBM, which Lenovo acquired as of April 30.

Lenovo previously reported its results in Hong Kong dollars. Starting with the current fiscal year, Lenovo will report its results in U.S. dollars, partly to reflect that an increasing amount of revenue booked by the company is in that currency. For the same period last year, the company reported a net profit of HK$357 million, or US$45.9 million as of June 30, 2005.

The latest results put Lenovo back into the black. In May, the company posted a loss of HK$903 million, or US$116 million, for its fiscal fourth quarter. Lenovo was hurt during the fourth quarter by sliding sales in Europe and Asia, excluding China.

European PC shipments continued to slide for the quarter from April to June, dropping by 12 percent year on year. However, the company saw increased shipments in all other geographies. The biggest gains came in Greater China, a region that includes China, Hong Kong and Taiwan, where shipments rose 30 percent, the company said. The company attributed that growth to higher demand for laptops and growing sales in China’s smaller cities and townships.

Lenovo saw PC shipments in Americas, including the United States, rise 6 percent, while shipments in the rest of Asia grew 3 percent.

By Sumner Lemon, IDG News Service (Beijing Bureau)

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