China’s Lenovo shrugs off concerns over shrinking global PC market

Lenovo Chief Financial Officer Wai Ming Wong talks about the company's annual performance and outlook

Revenue of the world’s largest PC makers Lenovo Chief Financial Officer Wong Wai-Ming said the company is not worried about its third consecutive quarterly decline in performance as global demand for PCs continues to slump.

“We are No. 1 in the PC segment. Obviously, when the market really returns to normal, we will definitely grow,” Lenovo Chief Financial Officer Wong Wai-Ming told CNBC.

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The company actually saw higher growth in its other businesses, such as infrastructure solutions and services, he added.

In its latest financial report On Wednesday, Lenovo said it expects “the PC market to return to growth in the second half of 2023.”

The company reported a decline in revenue for the January-March quarter. Revenue for the quarter was $12.63 billion, down 24% year-over-year, marking the third consecutive quarter of year-over-year declines.

Lenovo said in its financial report: “Considering the dual pressures of the PC market and the global economy, the fourth quarter of the fourth fiscal year is the most challenging quarter of the year.”

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But the CFO is optimistic that its non-PC businesses — devices, infrastructure solutions, and solutions and services — can help diversify the business.

“In fact, our full-year revenue hasn’t actually declined that much because the other two business groups have been driving significant growth in the infrastructure business. The margin business has also been mitigated or compensated by the significant growth in our services,” Wong said.

Lenovo’s non-PC business grew 7% and now accounts for nearly 40% of total revenue for the year ended March. The other 60% of revenue still comes from the PC business.

Yang Yuanqing, chairman and CEO of Lenovo Group, said on the earnings call: “Our non-PC business revenue mix increased to nearly 40%. Our clear strategy is working, and our operations are resilient, even in the face of global uncertainty. So is certainty.” . “Going forward, we will continue to invest in [research and development] Seize the next wave of growth opportunities, let us fully prepare for the future. “

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Lenovo’s device revenue fell 33% year-over-year in the first quarter.

But Wong is optimistic about AI driving the company’s devices business. Wong told CNBC that the acceleration of digitization, artificial intelligence and chatbots “actually requires devices” to take advantage of them.

“Ultimately, we’ll have three business segments driving revenue growth, rather than just PC as our primary driver as we have in the past. Over time, we’ll have three business segments driving profitability,” Wong said. explain.

Shares of Lenovo were down 1.8 percent in early trading Thursday.

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