Whom You Know: Lenovo Reports First Quarter 2011/12 Results

Thursday, August 18, 2011

Lenovo Reports First Quarter 2011/12 Results

Lenovo Group today reported results for its first fiscal quarter ended June 30, 2011, and for the seventh consecutive quarter, Lenovo grew faster than any of the top five PC manufacturers, helping the Company to become the world’s third largest PC vendor in total shipments.* During the first quarter, Lenovo’s worldwide PC shipments grew 23.1 percent year-over-year. Comparatively, industry PC shipments increased just 2.7 percent worldwide for the same period, marking the ninth quarter in a row that Lenovo has grown faster than the industry.

Consolidated sales for the first fiscal quarter increased 15 percent year-over-year to a record of US$5.9 billion. The Company’s gross profit for the quarter increased 41 percent year- over-year, with gross margin at 12.5 percent. Operating profit for the quarter grew 51 percent year-over year to US$123 million. Operating profit margin continued to expand, even after the Company’s reinvestment in branding, R&D and mobile internet business to drive future growth.

For the fiscal quarter, Lenovo reported a pre-tax income of US$123 million, a 64 percent jump year-over-year. Profit attributable to equity holders for the quarter was US$108 million, increased 98% year-over-year. Basic earnings per share for the first fiscal quarter was 1.11 US cents, or 8.63 HK cents. Net cash reserves as of June 30, 2011, totaled US$3.6 billion.

In June 2011, Lenovo announced its acquisition of MEDION AG, a leader in PC, multimedia products, mobile communications service and consumer electronics in Germany. The acquisition will double Lenovo’s market share in Germany and make it the second-largest PC company in Europe’s largest PC market. The Medion deal will also help fuel Lenovo’s expansion in consumer PCs and the high-growth mobile Internet market.

Lenovo also completed the formation of the joint venture company with NEC Corporation, forming the largest PC group in Japan. This joint venture makes Lenovo the number one PC vendor in two out-of-the three largest PC markets in the world.

"The Board is very satisfied with Lenovo’s first quarter results. Since we adjusted our leadership team in early 2009, our business continues to climb and everything has been executed well according to our original plans," said Lenovo Chairman Liu Chuanzhi. "Lenovo has an outstanding leadership team, the right approach to developing strategies, and strong execution capabilities, demonstrated by our performance this quarter. Our results show that Lenovo’s acquisition of the IBM PC business has become a success. In future quarters, you will see clearly that we will take what we've learned from this acquisition and apply that knowledge towards our joint venture with NEC in Japan and our acquisition of Medion in Germany."

“The solid execution of the successful “Protect and Attack” strategy fueled Lenovo’s strong performance in the past fiscal quarter that we have achieved record high in global shipments, revenue as well as global market share. At the same time, we outperformed the industry in all geographies, customer segments and product segments,” said Yang Yuanqing, Lenovo CEO. “Over the past two years, we have placed emphasis on and invested significantly in our business growth. Our global market share has now reached double-digits and we have attained a double-digit share in a greater number of our strategic markets. Starting this year, we are advancing to a more balanced strategy of continuing to grow, while shifting our focus more on profitability.

GEOGRAPHIC OVERVIEW
Lenovo China recorded US$2.8 billion in consolidated sales in the first fiscal quarter, accounting for 47.9 percent of the Company’s worldwide sales. During the quarter, Lenovo further strengthened its number-one position in China by 2.3 points, which resulted in an industry-leading market share in China of 31.7 percent, widening the gap between Lenovo and its major rivals. Lenovo’s PC shipments in China increased 23.4 percent year-over-year in the quarter, exceeding the overall industry increase of PC shipments in China of 14.3 percent.

In Emerging Markets** Lenovo’s consolidated sales totaled US$1 billion for the first fiscal quarter, or 17.5 percent of the Company’s worldwide sales. Lenovo’s PC shipments across the region increased dramatically by 46.5 percent in the quarter, more than three-times faster than the industry growth rate in this region of 14.7 percent year-over-year. Lenovo saw market share gains throughout the region for a total market share of 6.9 percent, highlighted by the Company’s record-high double-digit market share in India at 10.8 percent after a 3.6 points gain in that country during the first quarter year-over-year.

Mature Markets*** posted US$2.1 billion in consolidated sales, or 34.6 percent of the Company’s worldwide sales during the first fiscal quarter. Despite a year-over-year 9.4 percent decrease in the industry’s PC shipments across the region, Lenovo grew its PC shipments in the quarter by 8.5 percent. Of particular note, Lenovo’s PC shipments in North America grew 30.8 percent, compared to the market that fell four percent, allowing the Company to pick up 1.9 points of market share there. In Japan, Lenovo increased PC shipments by 14 percent year-over-year, in a market that overall grew at 2.9 percent for the quarter.

PRODUCT OVERVIEW
Lenovo’s Laptop computers continued to be the largest contributor to the Company’s sales worldwide, generating 59.8 percent of Lenovo’s total sales revenue. Consolidated sales for Lenovo’s laptop PC business worldwide in the first fiscal quarter totaled US$3.5 billion, an increase of 14 percent year-over-year. The Company’s laptop shipments worldwide in the quarter were up 23 percent year- over-year. During the first quarter, Lenovo introduced its highly-anticipated ThinkPad X1 laptop PC, giving users the thinnest, lightest, and highest performance combination for its class. The ThinkPad X1 was designed for mobile professionals who demand the best in performance, mobility and entertainment, and offers a simple, modern style with backlit keyboard, fast-charging batteries and a host of performance and multimedia capabilities.

Consolidated sales of Lenovo Desktop PCs worldwide increased 18 percent year-over-year in the first fiscal quarter to US$2.0 billion, or 34.1 percent of Lenovo’s total sales revenue. Desktop shipments for the same period increased 23 percent across the industry. During the first quarter, Lenovo announced the ThinkCentre 91z all-in-one (AIO) desktop PC, blending a sophisticated image, purposeful function and extreme productivity into a small, compact model. The ThinkCentre 91z is one of the industry’s most powerful AIOs, yet one of the thinnest, measuring just 2.5 inches, ideal for small and medium businesses looking for style and high performance with the convenience of a small footprint.

In its first full quarter of operations,Lenovo’s Mobile Internet Digital Home (MIDH) business group helped the Company achieve a 34 percent increase in total handset shipments of year-over-year,including smartphones and feature phones. New Lenovo smartphone and LePad tablet products are leading the way for Lenovo in China, and a new family of smartphones will launch in the coming months to drive future growth. Just last month, Lenovo introduced three new tablets, the IdeaPad Tablets K1 and P1, and the ThinkPad Tablet, available for sale in international markets.

*see IDC 2011Q2 press release (July 13, 2011)
** includes Africa, Asia Pacific, Central/Eastern Europe, Hong Kong, India, Korea, Latin America, Mexico, Middle East, Pakistan, Russia, Taiwan, Turkey
***includes Australia/New Zealand, Israel, Japan, North America, Western Europe and global accounts

Recent Testimonials by Brand Ambassadors on their Experience with Whom You Know

"I work with Peachy Deegan because she's prolific at what she does. She's a hard worker, she's thoughtful and she's tasteful at what she writes which is very important. Peachy gets the facts correct, and just that alone is worth its weight in gold."

-Edward Tricomi, Master Stylist and Owner of Warren-Tricomi
https://warrentricomi.com/

"No one has yet to express their taste for our cuisine better than Peachy Deegan on Whom You Know. Thank you for transforming our flavor into words, unlike any other before.
Sometimes WHOM YOU KNOW, really makes a difference and Ammos Estiatorio is grateful to know Peachy Deegan!"
-
Dimitris Nakos, Founder and Owner of
Ammos Estiatorio
https://ammosnewyork.com/

“Whom You Know has done an amazing job of featuring our company over many years [seven]. Peachy has worked tirelessly to create a well-curated selection of topics and brands that are clearly of relevance to her growing audience of readers. Her articles are filled with great insights based on first-hand experience. She does her research, knows her business and is a pleasure to work with!”

-David Sasuga, Owner of Fresh Origins Microgreens
www.FreshOrigins.com

"Peachy Deegan has the pulse of the nation and highlights exceptional opinion leaders in more than 23,000 inspiring and entertaining posts. Her 100,000 twitter followers are a true testimony to Peachy’s ability to inspire, motivate and entertain. She is a feminine force to be reckoned with and an exemplary example of an influential voice in today’s world."

-Mica Mosbacher, author of the new book The Hurricane Factor: Stormside Patriots and tv political commentator

"It was an honour to be chosen for Movers and Shakers by Peachy Deegan. The questions in the interview were intelligent and insightful and I thoroughly enjoyed answering them. The reaction to the interview has been overwhelmingly positive and has helped bring my art practice to a wider audience."
-Damien Flood, Internationally Acclaimed Artist
http://www.damienflood.ie/

"We were so fortunate to hit Peachy’s radar. Her review of our Warmies was spot-on and came at a great time in our company’s early history.
Peachy has such a strong relationship with her readers. She provides honest and real comments; she is truly a trusted source in a very large circle
of consumers."
-Scott Wehrs
President
Intelex U.S.A.
http://www.intelexusallc.com/

"We at Primola love working with Whom You Know and are proud to have been a highly-ranked Manhattan restaurant by Peachy Deegan since 2012, and are featured seasonally. We appreciate the fantastic work Peachy does highlighting our cuisine with her sublime writing style and the whole neighborhood of the Upper East side. Also, we are glad that she has started a Made in Italy column! If you have the opportunity to be considered for review, we'd highly recommend working with her."
-Giuliano Zuliani, Owner of Primola Restaurant
https://www.facebook.com/Primola-Canaletto-restaurants-NYC-135616799831091

"
Peachy Deegan is a gem. She is wonderful to feature our Irish brands in 'Whom You Know'! The articles are beautifully and passionately presented, bringing products and brands to life, making both relevant and fun for her many faithful followers to read. I am immensely proud for our hand-crafted products to be included in this venue!"

-
Bill Follett
President, Belleek Group North America
www.Belleek.com

"As you know from my past features, Peachy Deegan and I were in the same class at Boston College prior to either of us becoming entrepreneurs. When we played together on the BC Alumni softball team in Central Park years ago, she mentioned she could not find a great dentist in Manhattan and could often be found networking on her phone in the outfield hiding from the ball. She was my second patient ever in 2006 when I opened my dental practice; I was one of the first sponsors on Whom You Know and the first Mover and Shaker featured in 2009 and have worked with her continuously since. She's even talked her friends that are doctors into being my patients, and they subsequently send their hospital colleagues. I don't know anyone that is as great of a networker and writer as Peachy, nevermind that she is upstanding and always good for her word. Cosmopolitan Dental is so happy to be in the company of the caliber of major brands she works with today, and although she will tell you a million ways to get your teeth dirty between Peachy's Picks, Terrific Takeout and Peachy's Pantry, Peachy Deegan will tell you there is only one way to get your teeth clean!"
-Dr. Garo Nazarian, Founder and Owner of Cosmopolitan Dental
http://cosmopolitandental.com/