Lenovo Losses Rise As Its PC Business Struggles

Published By : 24 May 2018 | Published By : QYRESEARCH

Dragged down by steep cost of components, a sudden writedown on tax, and lesser income from disposal of assets, Chinese PC maker Lenovo Group has swerved to a loss making entity. Recently, it has posted it largest annual loss in almost nine years.

Incidentally, the company also lost out to HP Inc. in 2017 as the largest PC maker in the world. The company has taken a major hit on account of a shrinking market worldwide. When it comes to its smartphone business, it is also struggling to beat cutthroat competition.

The year-on-year annual loss in of Lenovo in March 2018 increased by 5% to reach a three-year high. This is the biggest loss the company has incurred since 2009.

Lenovo Ceded Ground to Rival HP Inc.

In fact, of late Lenovo is a laggard among technology stocks with its smartphones trying to gain a foothold in the market and its core PC business losing out to rivals of the likes HP Inc. So much so, the company has been dropped from Hong Kong’s benchmark index even though its chairman hopes a turnaround would happen as soon as next year.

The only redeeming factor for the company so far has been its datacenter business which is seeing steady improvement.

Overall, Lenovo’s performance, however, is indicative of the broader malaise plaguing the PC market wherein margins are getting squeezed as demand slows. This is mainly on account of the consumers switching to the more convenient smartphones and tablets.

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