Lenovo talks of turning corners and intelligent transformation

Lenovo has talked about accelerating the business with an eye on keeping its leading position in the PC market and keeping up investments in the IoT and cloud areas.

One of the themes of its first quarter results, for the three months ended 30 June, was the idea that the firm had 'turned a corner in its transformation' and was now entering a new phase of growth that was focused on 'Intelligent Transformation'.

Up to this point the vendor has concentrated on a message around a 3-wave strategy that involved focusing on PCs and smart devices, data centre and the mobile business. The firm is now looking to expand on that and get some traction in some of the hot areas of cloud, AI, IoT and big data.

“As we persistently execute our 3-wave strategy, all our businesses made solid improvements in both revenue and profitability. Lenovo has passed the turning point and entered a phase of ‘acceleration’ - accelerating the execution of our transformation strategy and accelerating the rising momentum in business performance,” said Yang Yuanqing, Lenovo chairman and CEO.

“In the future, we will maintain industry leading profitability and premium to market growth in PCs; return the smartphone business to health; build the data center business into a sustainable growth and profit engine, and continue to invest in ‘Smart IoT + Cloud’ and ‘Infrastructure + Cloud’ to drive long term sustainable return,” he said.

First quarter revenue was up by 19% compared to last year to $11.91bn and pre-tax income of $113m, which was in vast contrast to the $69m loss in Q1 2017.

In the quarter the PC operation improved by 19% year-on-year in terms of revenue growth with profitability of 5%. The firm is also increasing its investment in smart home and office devices and virtual reality.

Reductions in operating expenses to the tune of $100m helped improve the performance in the mobile business group along with a refined product portfolio and a decision to remain in markets where it could compete.

The data centre group also delivered with revenues of $1.6bn with the growth being helped by increasing demand for software defined infrastructure, the ThinkAgile offering, high performance computing and AI. Traditional infrastructure benefited from customer interest in the flash storage offerings.