Lenovo Q4 2015 financial results are all-around mixed
Though the company remains one of the largest PC manufacturers, its acquisition of Motorola has yet to pay off in spades as smartphone competitors like Huawei and Xiaomi continue to eat up market share in Asia. Overall sales fell last quarter (Q4 2015) by 19.1 percent to 9.1 billion USD for a fiscal year revenue drop of 3 percent to 44.9 billion USD. Q4 2015 net income, however, was up 80 percent YoY to 180 million USD due in part to internal restructuring where the company saved a total of 690 million USD. The 2015/16 fiscal year bottom line is still in the red at -128 million USD despite some positive Q4 2015 results.
Mobile Business Group: Problems in China and disappointing Motorola integration
A quick look at Lenovo's smartphone business reveals some troubling statistics. While the company was able to ship 63 percent more smartphones outside of China for a total of 51 million units, Lenovo lost significant market share in its home country with a sales drop of 85 percent. Lenovo credits the poorer sales to a trend where consumers would rather spend more on mainstream and flagship smartphones that are unlocked and not through an existing carrier. Lenovo recently launched its ZUK brand to better compete against Xiaomi, Oppo, and Vivo, though its success has been mixed. Budget and very cheap smartphones may not be proving popular for new buyers.
Another problem is the acquisition of Motorola itself where Lenovo was hoping that the well-known brand name could boost smartphone sales for the Chinese manufacturer. Nonetheless, Motorola contributed 1 billion USD in revenue this past quarter for a total of 1.7 billion in revenue for Lenovo MBG. Lenovo had historically recorded a string of losses in its smartphone group.
PC Group: Lenovo fightiing strong in the PC market
The PC business continues to be Lenovo's largest source of revenue and profit, though the trend has been in the negative due in part to a stagnating market. At 6.2 billion USD, the manufacturer's PC Group accounted for 68 percent of sales, so the company is clearly dependent in the PC market. Profits accounted to 312 million USD last quarter through sales of 12.1 million PCs for a sizable market share of 20.2 percent.
Enterprise Business Group: Expanding presence in the Server market
In addition to its PC Group and Mobile Business Group, the Enterprise Business Group (soon to be renamed to the Data Center Group) is looking to be a mainstay for Lenovo. The company reported a sales growth of 73 percent over the previous year for a total of 4.6 billion USD. The integration of the IBM System x division remains just borderline profitable, however, with a reported income of -16 million USD.