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Lenovo looking to channel for data centre growth

Lenovo is aiming to increase its data centre group revenues and is banking on the channel helping reach that goal

Lenovo might have made the top spot in the PC industry its own in terms of market share but even it cannot defy the gravity in the market and saw hardware sales drop.

The firm was also squeezed on the mobile phone front because customer spending in that segment is also coming under pressure.

Overall Lenovo's second quarter results for the three months ended 30 September were very solid.

The firm showed an 8% decline in revenue year-on-year to $11.2bn but pre-tax income bounced back from a $842m loss in Q2 2015 to $168m in the black.

The vendor does not break down individual country performance but in EMEA, which represents a quarter of the total revenues, sales in Q2 dropped by 14% to $2.7bn and there was a pre-tax loss of $65m.

The overall return to profit came against a backdrop of "challenging times" and gave the firm's CEO some confidence that its strategy was delivering.

“Market conditions remained challenging but we delivered solid results. Our PCs and smart devices business maintained leadership and strong profitability, our Mobile business had good quarter-to-quarter volume growth and margin improvement, and our Data Center business is actively addressing its challenges,” said Yang Yuanqing, chairman and CEO of Lenovo.

“We remain confident in our vision, our strategy and our team’s ability to achieve new heights," he added.

The PC and tablet division saw a 8% decline y-o-y but strong margins in China and the US meant that pre-tax income slightly rose.

The mobile phone operation, which includes the Motorola products, was down by 12% but up by 20% on Q1 indicating that problems in that segment are being addressed.

From a channel perspective the main area of focus is in the data centre business, which is beginning to get traction.

"Lenovo has a focused execution plan for this business: we are strengthening our field capabilities and channel engagement, investing in training and overhauling our sales structure to better engage with our customers," the firm stated.


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