Lenovo benefiting from strong PC market

This has been a promising year for vendors selling hardware, and Lenovo’s latest quarterly results bear that out

Lenovo has followed up its bullish comments made on the prospects for the PC market at October’s Canalys Channels Forum, with second-quarter numbers that are bearing out its expectations.

Speaking at the Canalys event last month, the vendor’s corporate president and chief operating officer, Gianfranco Lanci, said that its channel had seen growth in the past few months and more was in the pipeline.

The vendor has now followed that up with financial results that showed a 7% increase in revenue to $14.5bn and a 53% climb in net profits to $310m. The PC and smart devices group delivered 8% year-on-year (YoY) improvements, the mobile business group was up by 39%, and the datacentre operation improved by 11%.

Lenovo is expecting the PC market to grow by 200 million units this year, and a further five million to 10% increases in 2021.

But outside of its traditional product areas, the firm was also able to report smart IoT (internet of things) growth of 36% and the software and services improved by 39% to breakthrough the $1bn revenue barrier.

Yuanqing Yang, chairman and CEO at Lenovo, was able to talk about the firm responding to the changing needs of the market, accelerated over the past few months by the coronavirus pandemic.

“Our record results this quarter reflect our ongoing commitment to meeting the needs of the rapidly growing work, learn and play from home economy. All of our core businesses delivered year-on-year growth, while our software and services revenue grew to a new record,” he said.

“As the world continues to adjust to the ‘new normal’, we are confident in the long-term growth potential of both devices and cloud infrastructure. We will continue to leverage our core competences of operational excellence and global/local footprint, while accelerating our service-led transformation to better grasp opportunities and drive sustainable growth,” he added.

Lanci took to the results analyst call to reaffirm his belief that the PC market was going to not only close out 2020 strongly, but would also keep that momentum going into next year.

“We see 2020 is probably going to be 25 million additional units in terms of total available market. It’s coming from more or less minus five million in Q1, and then plus 10 million for the following three quarters. And the market will be probably between 295 million and 300 million,” he said.

“Assuming something in the range of 300 million this year, I think 6% to 7% growth in 2021 ... we will continue to see a very strong demand on education,” he added.

Speaking on the same analyst call about the results, Yang echoed the views of many in the industry about the role that technology had played during the pandemic and its importance going forward.

“I believe that technology has never been so essential to humanity as it is today. Customers have new requirements to meet in this new normal. And our success in meeting these needs is demonstrated not only by our strong results this quarter, but by how our service-led transformation propels our growth well into the future,” he said.

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