If the core business of a company currently consists of PCs and notebooks, it has a really big problem. This can be seen in the Chinese manufacturer Lenovo, which does not have any notable pillars in other areas.
Like its various competitors, the company has been able to benefit from the booming home office trend in recent years, which has once again brought a decent upswing in hardware sales. However, this development came to a quick end and since Lenovo’s business lives almost exclusively from corresponding computers, it was now hit much harder than many a competitor who also has other larger sources of income.
In the past quarter, the group experienced the biggest drop in sales in 14 years. At that time, a global economic crisis had caused investments in new PCs to collapse massively. Now it was mainly a rather positive development – namely the end of a pandemic situation, even if there are of course other problems such as the energy crisis and inflation that is noticeable worldwide.
According to the company, in the period from October to December 2022, sales worldwide were only 15.3 billion dollars. That is a full 24 percent less than in the previous year. The management announced corresponding reactions. “This includes an overall reduction in operating expenses as well as staffing adjustments where necessary and appropriate,” said Chief Financial Officer Wong Wai Ming. It is unclear whether this also means layoffs.
In general, however, there is hope that the situation will improve again soon. CEO Yang Yuanqing explained that device activation data shows that actual demand is not as bad as it might seem. Rather, excessive inventories are currently being reduced, which can take one to two quarters. Accordingly, he expects a trend reversal in the second half of the year. However, market researchers are not so sure whether this will happen. They are definitely assuming a minus for the year as a whole.
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