China's Lenovo global PC shipments fall 1 percent, slower than market decline

By Sijia Jiang

HONG KONG (Reuters) - China's Lenovo Group Ltd, the world's largest personal computer maker, said its global PC unit shipments fell 1 percent in the year ending in March, against a market decline of 3 percent, as consumer demand continued its downward trend.

Revenue from its personal computer and smart device business, which accounts 70 percent of total revenue, fell 2 percent to $30.1 billion.

Lenovo blamed a 4 percent drop in total revenue to $43 billion on difficult macro environment, its own business transformation efforts, and component supply constraints in the second half of the year.

For the full year ended March, Lenovo posted a profit of $535 million, reversing a loss of $128 million a year prior. The result compared with the $569 million average of 24 estimates.

According to market intelligence firm Gartner, worldwide PC shipments totalled 62.2 million units in the first quarter of 2017, the 10th consecutive quarterly decline and the first time since 2007 for the figure to drop below 63 million.

Lenovo said its worldwide PC market share for the full year rose 0.4 percentage point to a record high of 21.4 percent, though that is down from 22.4 percent in the previous quarter.

"Despite market conditions that will remain challenging in the short term, the Group exited the year with stronger organization allowing for sharper customer focus and more compelling product portfolio across all our business," Chairman and Chief Executive Officer Yang Yuanqing said in a filing.

PC competition took a step up this week when China's largest mobile phone maker, Huawei Technologies Co Ltd, said it would enter the market for premium consumer models.

Lenovo also competes with Huawei in mobile, which accounts for 18 percent of its revenue. The business' loss widened to $566 million last year from $469 million a year prior on a 10 percent drop in revenue to $7.7 billion, though Lenovo said the business had strong growth in markets outside China, especially Latin America and Western Europe.

The company's smaller data centre business, which includes servers and enterprise services, incurred a loss of $343 million, with revenue down 11 percent to $4.07 billion.

Yang said Lenovo's core PC business remained solid, transformation for mobile businesses is on track, while it is accelerating efforts to improve its data centre business.

He said last week Lenovo will reorganise domestic operations in response to the changing PC industry. Lenovo China will split into two divisions: one focused on consumer PCs and smart devices, and the other on data centres.

Lenovo's profit for the three months through March dropped 41 percent to $107 million. That beat the $93.8 million average of 11 analyst estimates in a Thomson Reuters poll.

Revenue rose 5 percent to $9.58 billion, against an estimate of $9.6 billion.

(Reporting by Sijia Jiang; Editing by Christopher Cushing)