Lenovo's Disappointing/Better-Than-Expected Earnings

Posted by: Bruce Einhorn on May 22, 2008

Lenovo once figured it could leverage its PC strength in China and diversify into handsets. That worked about as well as Dell’s attempt to sell LCD televisions. (Have you seen many Dell TVs lately? I didn’t think so.) Turns out consumers like buying PCs from PC companies and phones and TVs from consumer electronics companies. So Lenovo, like Dell, decided to focus on its core business and earlier this year sold the cell-phone division. That sale is having a strange impact on the quarterly results just announced today. Lenovo execs revealed the company made $140 million for the quarter. And according to Bloomberg, the company’s earnings of $140 million “beat analysts’ estimates on increased sales in Europe.”

Sounds good. But Reuters has a different take. According to the British wire, the $140 million figure is misleading because it includes profit from the cell phone division that Lenovo recently offloaded. Strip out those numbers and Lenovo earnings actually were just $120.5 million. That figure “lagged forecasts despite doubling quarterly earnings, as a one-off gain from the sale of its mobile arm and strong sales in a resilient China market failed to offset stiff competition and a U.S. slowdown in notebook sales.”

We’ll have to wait till tomorrow to see which story investors buy. Lenovo is traded in Hong Kong and the results came out after the market closed today. One plus for Lenovo is its relatively small presence in the U.S. With the American economy slumping, Lenovo has less to lose than rivals like Dell, HP and Acer.

Reader Comments

Bob

May 23, 2008 12:49 AM

Finally, back to business, it prove that you guys can write straight business story.

Andy

May 23, 2008 1:38 AM

Lenovo can learn a thing or two from Apple

Praful

May 23, 2008 11:14 AM

Only one exception to the PC from PC makers and Phones from Phone makers - Apple... Made the move successfully and is getting into newer territories... mostly due to Jobs' great charisma, that drive for excellence and the ability to look beyond what's visible

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