China’s Lenovo Group Ltd reported a 24% revenue decline for the third quarter, its biggest revenue decline in 14 years as global demand for electronics slumped, and said it was considering spending cuts and workforce adjustments. Will do
The world’s biggest maker of personal computers (PCs) said on Friday that total revenue during the October-December quarter was $15.3 billion, down 24% from the same quarter a year ago. The results beat the average Refinitiv estimate polled from seven analysts of $16.39 billion.
The COVID-19 outbreak in 2020 provided a huge boost in electronics sales for Lenovo and its peers worldwide as many people opted to work remotely and replace or upgrade their devices.
However, demand has started declining and Lenovo’s revenue started contracting in the July-September quarter last year.
Lenovo Chief Executive Officer Yang Yuanqing told an analyst call after its earnings call that the entire PC and mobile market experienced a “severe slowdown” last quarter, and the company was looking to reduce spending and improve efficiency.
Its chief financial officer Wong Wai Ming said Lenovo is aiming to reduce its run rate operating expenses by about $150 million to achieve the medium-term goal of doubling net margin.
“This includes an overall reduction in operating expenses as well as workforce adjustments where necessary and appropriate.” They said.
Wong did not elaborate on whether this would include layoffs.
Rivals Dell Technologies Inc and HP Inc have announced they will cut staff. Dell said it would cut about 6,650 jobs, or 5% of its global workforce, while HP is expected to cut up to 6,000 jobs by the end of fiscal 2025, or about 12% of its global workforce.
Lenovo’s net income attributable to shareholders fell 32% to $437 million for the October-December quarter. Lenovo shares fell 3.14% on Friday in Hong Kong.
IT research firm Gartner said last month that PC and mobile phone shipments are likely to decline for the second year in a row in 2023. Gartner said PC shipments are expected to decline 6.8% this year, after falling 16% in 2022.
Lenovo said the market was in the process of digesting excessive inventory, which may require another quarter or two. But Yuan said device activation data suggests actual demand isn’t as bad as it might seem.
“From the second half of the year, you will see growth again in the PC market,” he added.
catch all corporate news And updates on Live Mint. download mint news app to receive daily market update & Live business News,