Weakest Growth of Quarterly Profit Registered by Lenovo in Two Years

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By Industry Leaders Magazine | November 10, 2012 11:44 AM EST

Industry Leaders Magazine

Lenovo Group Ltd, which is looking to register itself as one of the top makers of PCs in the world, has suffered a major setback when it logged the weakest quarterly profit growth in a period of two years this quarter. The result was caused by the fact that more and more customers are intending towards the mobile gadgets instead of the PCs to fulfill their needs of computing.

The history:

Lenovo Group Ltd has had quite a strong hold in the market of PCs as shares of Lenovo have for quite some time reigned over arch rivals like Acer Inc. and Dell Inc. According to Gartner, a technology research firm, shares of Lenovo have already gone past the leader of the market Hewlett Packard Co. in regard to the shipments of PCs. A rival research firm IDC has however provided Lenovo Group Ltd the second best position even though the margins are too close. But the maker of the ThinkPad is now facing tough challenge in the business of mobile computing where it has stepped into only recently. This is definitely a major reason for the weak quarterly profit growth of Lenovo as the company has to compete with dominant makers of tablet PCs and smartphones like Apple Inc. and Samsung Electronics Co.

The Current status:

Lenovo Group Ltd reported a net profit of nearly $162 million in the period of July to September in comparison to approximately $144million that it did earlier for a year. According to the estimate of nine analysts of Thomson Reuters, the company was expected to make of profit of nearly $156.3 million. Shares of Lenovo have been capturing the market in the sector of PCs for quite some time now thereby claiming the top spot in countries like China, Japan and India. However there has been a slow down in the quarterly profit growth of Lenovo with the PCs sector getting diminished slowly. Hence in order to uplift the quarterly profit growth of Lenovo, what the company needs is to pack more punch in the mobile computing sector of the market. The consumers in this sector are much more fickle to features and brands thereby increasing their chances of making a mark.

Foray of Lenovo in the mobile computing sector:

Lenovo Group Ltd launched the Yoga only last month which is a laptop that runs on the Windows 8 operating system of Microsoft Corp. The laptop can however be converted into a tablet PC by flipping its screen all the way backwards. The endeavors in the mobile computing sector will determine the quarterly profit growth of Lenovo a portion of the market that is dominated heavily by the Apple's iOS and the Google Inc's Android. Shares of Lenovo driven mostly by its sales in China dropped by approximately 2.2 percent as the reports showed on the 8th of November. Shares of Lenovo were however up by as much as 28 percent at the beginning of this year comfortable putting behind the performance of other PC making companies like Acer, Dell and HP.

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