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Lenovo Reports Strong and Steady Profit Improvements for Q2 Backed by Premium PCs

Lenovo's IoT business could counter the losses from mobile going forward.

By jonathan chadwick

Lenovo has recorded its third consecutive double digit revenue growth for the quarter ending September 30, with strong performance from PCs and its datacentre business picking up pace.

Revenue for its second quarter was up 14 percent to $13.4 billion, the highest quarterly revenue in nearly four years.

Net profit for Q2 2018 was $168 million, up from $139 million a year prior, while pre-tax income was $213 million, six times that of the previous year’s $178 million.

Lenovo results for the quarter showed profit improvements across all its businesses, the company said.Lenovo results

“Today’s results show that Lenovo’s focus on intelligent transformation continues to successfully underpin our growth in both revenue and profitability,” said chairman Yang Yuanqing of the Lenovo results.

“There is no doubt that Lenovo is in a period of strong, sustainable growth and I am confident that our clear mission, strategy, and execution capabilities will continue to drive even stronger results in coming quarters.”

Lenovo was given a boost by its sales PC and smart devices, a division that reported $10.2 billion in revenue, up 18 percent year on year.

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The group saw double digit growth for Legion gaming, ThinkStation workstations, and thin and light Yoga, ThinkPad and IdeaPad categories.

Performance in PCs helped Lenovo reclaim the top spot in PC rankings earlier this year, according to IDC, with 24 percent of global market share and pipping HP to the post.

Lenovo saw an improvement in its North American business as a result of a revamped channel strategy and more stable management, the research firm said.

Lenovo Results See Datacentre, Mobile Picking Up

Across the other segments, Data Centre Group continues to recover, marking its fifth consecutive quarter of profit growth, and a 58 percent year-on-year increase in revenue to $1.5 billion, helped in part by partnerships such as that with NetApp, announced in September.

Hyperscale marked triple-digit year-on-year growth for the third consecutive quarter, while Software Defined Infrastructure reported 150 percent year-on-year growth, its seventh consecutive quarter of growth over 100 percent.

During the quarter the company expanded on its “intelligent transformation” growth with new Smart IoT products, with smart devices a key part of its strategy going forward.

Namely, its Smart Display and Smart Home Essentials ecosystem of IoT home devices unveiled this year contributed Intelligence Devices Group revenue growth of 10 percent year on year to $11.84 billion.

Lenovo’s sluggish mobile business saw losses narrow, with North American shipments up 53.4 percent over the quarter and its Motorola brand seeing operational breakeven.

Read more: Fujitsu sells 51% stake to Lenovo to increase PC market share

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