Lenovo moved to a net loss of USD 289 million for its fiscal third quarter to December, from a profit of USD 98 million a year earlier. The result was hurt by a writedown of USD 400 million on its US tax assets and continued losses at its mobile phone business.
Operating profit was still up 48 percent to USD 204 million, and revenues rose 6 percent to USD 12.939 billion. Lenovo also completed a capital increase, raising USD 496 million to strengthen its balance sheet.
The PC division showed a solid performance amid signs of market improvement, Lenovo said. While shipments were flat year-on-year at 15.7 million, revenue grew 7.6 percent to USD 9.3 billion, and the company maintained its margins.
Sales were also higher at the data centre division, up 16.7 percent to USD 1.2 billion, but revenues fell 5 percent at the mobile phone business, to USD 2.1 billion. Lenovo said the data centre unit narrowed its losses in the quarter, while mobile suffered from high component costs and spending on branding, leading to continued losses.
In mobile, Latin America remained the strongest market, with double-digit revenue growth (+37%) and strong profitability. The company also said it saw the Moto brand strengthen in Western Europe, with shipments up 23 percent compared to the same period a year ago, as it focuses on carrier channels. In total, 5 million Moto Z handsets have shipped globally, and Mods activations were up 64 percent year-to-year.
Total smartphone shipments were still down 18 percent year-on-year. Lenovo blamed the fall on a slower brand transition in emerging areas in EMEA and the severe competition in Asia Pacific emerging markets. In China, the group is still adjusting its product strategy to adapt to the new competitive conditions.
