Status as the world’s largest PC maker got Lenovo into trouble last quarter, in the form of a 24% decline in revenue that was worse than analysts expected. The company’s quarterly revenue has declined for four consecutive quarters, and in its most recent fiscal year, Lenovo ended its first 14% earnings decline since 2019 in March.
As mentioned ReutersLenovo ended the second quarter with revenue down to $12.9 billion, below the $13.84 billion forecast by outside experts. The main reason for the decline in sales in the PC segment is an excess of finished products in warehouses with a simultaneous reduction in demand. Last year’s impact of the pandemic and increased demand for PCs provided a high basis for comparison, putting Lenovo’s current stats in a not-so-favorable light.
Lenovo management had reason to believe that the company’s PC business is stabilizing and should post growth in the second half of this year compared to the same period last year. According to Canalys, PC shipments fell 12% in the second quarter of this year, but that’s significantly less than the more than 30% decline in the previous two quarters.
In order to maintain profitability, Lenovo is trying to expand business in server hardware and all kinds of enterprise solutions. However, PCs, smartphones, and tablets still make up about 80% of the company’s revenue, making it difficult to offset that effort. Lenovo’s net income fell 66% to $177 million in the second quarter, below expectations of $212.49 million.