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Lenovo heralds channel role in data centre business

The vendor might have delivered its first quarterly result since 2015 but highlighted the investments it had made on the channel side in its data centre business

Lenovo has delivered a mixed set of first quarter results but used the chance to update investors on how it has been working with the channel on the data centre side of the business.

The firm delivered its first quarterly loss for a couple of years blaming higher marketing and component costs for the unexpected dip in its fortunes.

Lenovo announced pre-tax losses of $69m, with a net loss of $72m for the three months ended 30 June. Revenues of $10bn were flat year-on-year.

The vendor has been following a 3-wave strategy focusing on PCs and smart devices, data centre and the mobile business and despite the unexpected loss feels that the plan is paying off.

“In the first quarter this fiscal year, we had stable performance as we executed our 3-wave strategy with commitment. We maintained our industry leading profitability in PC, built the foundation in mobile and data center, and further invested in ‘Device + Cloud’ and ‘Infrastructure + Cloud’ powered by Artificial Intelligence,” said Yang Yuanqing, Lenovo chairman and CEO.

Component cost rises caused pre-tax income in the PC and smart devices business group to drop and $7bn revenues were flat. But ASPs improved by 7.8% with the vendor noting a shift by customers towards higher end models.

The channel came in for a mention on the data centre business, which includes servers, storage, software and services, with the vendor highlighting the investment it had made in partners in Q1 as one of the positives.

“We have made solid progress on every front of our strategy. Particularly [the mobile business] continued to improve, and is on track to breakeven by second half of this fiscal year. [The data centre group] gained good momentum as well. As the two new growth engines gain speed, we believe the sustainable results will soon follow," added Lenovo's CEO.

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