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May 21, 2015

Lenovo misses forecasts as profit drops 37% in Q4

Mobile unit shipped a record 18.7 million smartphones for the quarter.

By CBR Staff Writer

Lenovo has reported a 37% decline in its net profit for its fiscal fourth quarter, falling short of analysts’ expectations and following the completion of two major acquisitions last year.

The Chinese firm acquired US-based Motorola Mobility for $2.91bn and IBM’s low-end server business System x for $2.1bn, in efforts to expand its business away from the fading PC market.

Net profit for the fourth quarter fell to $100m, or $0.90 per share, from $158m reported in the corresponding 2014 quarter.

Revenue has however increased 21% to $11.33bn, despite the company claiming it as a seasonally slow quarter with significant currency impacts.

Lenovo’s mobile unit, which includes products from Motorola Mobility, shipped 18.7 million smartphones for the quarter and a company record of 76 million for the full year.

Revenue for the division, which also includes Android tablets and smart TVs, was $2.8bn for the quarter.

The company’s PC unit shipped 13.3 million PCs in the quarter, up 2.7 percent year-over-year. The unit, which also produces Windows tablets, recorded revenues of $7.2bn, an increase of 11% year-over-year.

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Smartphones, tablets, servers and other services contributed 37% of revenues in the quarter, compared to 17% in the earlier year.

Lenovo chairman and CEO Yang Yuanqing said: "In view of the opportunities and challenges of the new Internet+ era, we are ready to transform ourselves from making mostly hardware to a combination of hardware and software services. This will spur a new wave of growth for Lenovo in the coming years."

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