Lenovo Group Ltd (HKG: 992)’s Mediocre Second Quarter Proves Disappointing
Lenovo Group Ltd (HKG: 992)’s enthusiastic run at the technology market is gradually coming to a halt. Lenovo Group Ltd (HKG:992)’s recent mediocre earnings proved that it still has to do a lot to stand up to seasoned competitors like HP (NYSE:HP) and others in the market. Lenovo Group Ltd (HKG:992) was hailed as an Asian giant in the making, but now it seems that it was just a bubble growth.
In the second quarter earnings, Lenovo Group Ltd (HKG:992) didn’t impress at all, growing only by 7 percent, which is the same they percentage they managed last year in the same quarter. The revenue came out 19.5 billion dollars. Net incomes didn’t show much promise either; Lenovo Group Ltd (HKG:992)’s growth started off very rapidly but in the past quarter the company managed to grow from $220 million to $262 million only.
Lenovo Group Ltd (HKG:992)’s main concern is its home ground- China. In the prospering Chinese market, Lenovo Group Ltd (HKG:992) lost 94 million dollars, decreasing the revenue to 3.8 billion dollars. Home grown products and imports took a toll on Lenovo Group Ltd (HKG:992)’s revenue and the company didn’t even see it coming. Lenovo Group Ltd (HKG:992) fared well in Europe- Germany, Russia, Eastern side of the continent generated 3.0 billion dollars, due to a raise of $763 million profits.
Lenovo Group Ltd (HKG:992)’s notebook sales went up by 9 percent, PC sales shot up by 11 percent, but the Smartphone department didn’t turn out too good for the company. Smartphone sales have declined by 6 percent. The reason behind the decline could be the fact that the smartphone market is filled with tough veteran competitors. Decline in the smartphone sales should be the main concern of Lenovo Group Ltd (HKG:992), because consumers are inclined towards these devices rather than Notebooks and PCs. The digital age is all about convenience and people are moving towards those devices that are easy to carry and can encapsulate the customer’s life in a single small efficient device.
Lenovo Group Ltd (HKG:992)’s management on the other hand, claims that the coming years will prove prosperous for Lenovo Group Ltd (HKG:992), as the company is closing in on becoming the top brand when it comes to PC’s and tablets. Lenovo Group Ltd (HKG:992)’s management is optimistic about the fact that mobile phones, like PC, will become a profit pool for them in the near future.
Investors wouldn’t really appreciate Lenovo Group Ltd (HKG:992)’s statements, because the company hasn’t delivered. It choked at the finish line without getting the job done. Lenovo Group Ltd (HKG:992) must not get too eager; it should concentrate on the area that is going strong for the company, for now. The smartphone market is a risky territory to venture into, because it’s full of tech giants that can trample Lenovo Group Ltd (HKG:992). Lenovo Group Ltd (HKG:992) should take some time and gain some market power and finances if it wishes to challenge the big players in the technology market.