Bloomberg News

Lenovo Drops to 6-Month Low After ICBC Says Outlook Weak

July 06, 2012

Lenovo Group Ltd. (992), the world’s second-largest computer maker, fell to the lowest in six months in Hong Kong trading after ICBC International Research Ltd. said the company’s growth outlook is weakening.

Lenovo fell 4.4 percent to HK$5.70 as of 1:51 p.m. in Hong Kong trading, headed for the lowest close since Jan. 6.

Global computer shipments will rise 5 percent in 2012, which will be a “challenging year” because of the debt crisis in the euro-area economy, researcher IDC forecast last month. Lenovo shares have dropped 26 percent in the past two months, compared with a 6.2 percent decline in the benchmark Hang Seng Index amid concern the economic slowdown hurt computer demand.

“The recent price correction was attributable to the weakening PC growth outlook and its stretched valuation,” Kary Sei, a Hong Kong-based analyst with ICBC, wrote in the report. “In view of the slowing global economy, the PC demand surprise is likely on the downside.”

Even as Lenovo continues to win market share from its rivals, the company will deliver “a high single digit to mid- teen” percentage growth in earnings per share in the fiscal year ending March, according to the ICBC report. Sei declined to comment when reached by phone today, citing company policy.

Lenovo can’t comment on today’s share price move, said Jeff Shafer, a company spokesman.

“We continue to be confident in our strategy and execution and in our overall performance in PCs,” Shafer said. “As we have stated before, it remains our expectation to grow faster than the market, and we continue to make the long-term investments in areas like product innovation and building our brand that will enable us to maintain our momentum.”

Lenovo will grow “at a significant premium to market,” Milko Van Duijl, Lenovo’s president for the Asia-Pacific and Latin America, said in a June 28 interview in Hong Kong. He didn’t give a specific growth forecast at the time.

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net; Anand Krishnamoorthy at anandk@bloomberg.net


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