Lenovo Quarterly Numbers: Smartphone-business continues to loose money
Lenovo is going through a crisis. This is no secret, considering the company lost money in the last business-year. Most of this loss can be attributed to Motorola, as Lenovo openly stated in one of the last quarterly reports that the acquisition did not fulfil expectations. Most of the loss was attributable to a huge depreciation on Motorola.
Of course, this year is supposed to be better for Lenovo. Indeed, the smartphone businesses doesn´t loose as much money as last year, with a margin of -5,6% instead of -7.5%. Despite this small step forward, the business-unit still produced a loss of 114 million (without tax), while producing a revenue of 2 billion dollar (-12,5%). The Mobile Business group is not the only loss-producing business for Lenovo: The important Server/Enterprise business, originally supposed to be the third support-column for Lenovo, has also brought in a loss of 108 million dollar. It seems that the company didn´t handle the acquisitions of Motorola Mobility and the IBM x-Server business very well.
A complete loss was only averted by two factors: First, the moderately profitable PC business. This unit had to fight with a sinking revenue-value (-8%, 7.8 billion dollar), but it had a higher margin of 5.2 instead of 4.6%. Overall, the PC unit accounted for a profit of 405 million dollars.
Second, there was a one-time-only effect: Lenovo has sold property, like office-buildings. Through this, the company had an additional income of 218 million dollar. This saved Lenovo from loosing money, as the company only had a total income profit of 156 (with taxes), and a complete revenue of 11 billion dollar (-8%).
It remains to be seen if Lenovo can manage to escape this crisis, without a bigger restructuring. The Moto Z line had gathered some favorable reviews, like in our own tests (see: Moto Z and Moto Z Play), but its still unclear if they will be the needed big success for the company. It is doubtful that the company has an indefinite amount of property to sell.