Quarterly revenues were still up 16 percent year-on-year to USD 12.2 billion and rose 23 percent excluding currency effects, while the gross margin fell to 13.0 percent from 13.9 a year ago. The sales growth was largely due to the acquisition of Motorola, which helped the Mobile Business Group double revenues year-on-year to USD 2.7 billion. Motorola contributed USD 1.4 billion in revenue. However, the MBG’s posted a pre-tax loss of USD 217 million for the quarter. Lenovo said the restructuring and brand alignment was continuing as planned and it aims to have the business turned around in "one to two quarters" so it can focus on turning a profit.
Smartphone shipments increased 11 percent year-on-year to 18.8 million units. Lenovo said its strategy on focusing more on markets outside China paid off, with 70 percent of shipments in the fiscal first half going to the rest of the world compared to just 19 percent a year ago. Tablet shipments also showed growth of 0.9 percent to 3.1 million units in Q2, outperforming the contracting market.
The PC Group saw revenues fall 7 percent to USD 8.1 billion, and pretax profit was down 17 percent to USD 406 million. Lenovo said it suffered from currency fluctuations, hurting demand in the EMEA region and Brazil. The Enterprise Business Group, which includes servers, storage and software, recorded sales of USD 1.2 billion, up 5.5 times from a year ago thanks to the acquisition of IBM's System x business, which contributed USD 900 million in sales. On a comparable basis, revenue rose 2 percent, the first growth since the acquisition. The enterprise division still had a pretax loss of USD 33 million.
