Lenovo Still Struggles Outside China

Posted by: Bruce Einhorn on August 6, 2009

Lenovo, China’s biggest PC maker, reported better-than-expected quarterly results today, a sign that the company is starting to benefit from a new strategy focusing more on the Chinese market. Lenovo reported a loss of $16 million, on sales of $3.5 billion, for the three months ending June. That’s Lenovo’s third quarter in a row of losses, but since analysts had been looking at a much larger loss, investors were cheered by the news and sent Lenovo’s stock price up 5.2%. Lenovo shares have more than doubled since early March. Following the departure in February of former CEO William Amelio and the return from retirement of founder Liu Chuanzhi as chairman, Lenovo has been emphasizing its business in China, where it’s the clear leader, rather than markets such as the U.S. where it’s an also-ran.

That’s starting to pay off for Lenovo, which has had a boost in market share. According to second-quarter numbers from IDC, Lenovo had 8.7% of PC shipments worldwide, up from 8.3% a year ago and 7% in the first quarter of 2009. That still leaves Lenovo far behind Taiwanese rival Acer, though; Acer had 12.7% of shipments in the second quarter, up from 10% in the second quarter of 2008 and 11.6% in the first three months of this year. And Acer, propelled by strong sales of its netbooks, is likely to pass Dell soon and become No. 2 worldwide in shipments, behind only HP.

Meanwhile, Lenovo is in danger of being where it was before it acquired the PC division of IBM four years ago: Tops in China, a laggard elsewhere. Shipments in North America and Western Europe fell 17%, the company reported. There are worse predicaments to be in, of course; China is a huge market, after all. But this wasn’t exactly what the Chinese government had in mind when it gave the green light to Lenovo making its big leap overseas.

Reader Comments

abc

August 11, 2009 12:21 PM

Prejudice at work

Dave

August 12, 2009 7:33 AM

IBM = a brand
Levono not a brand.
The loss of the use of the brand name has to hurt.

Pallavi

November 1, 2009 11:50 PM

see i personnaly have lenovo desktop which is really nice u can't say that lenovo is not a brand or in another words a trusted brand. every company have to see peaks and falls but dat doesn't mean that lenovo gonna shut its shutter now it depends on lenovo how they resist all these falls in indian market vat stratergies they'll apply to revive

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Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

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