Lenovo profits slump on flat revenue

Senior management laments downturn and insufficient implementation of strategy

PC vendor Lenovo claimed its "strategic plan" was not executed properly after second quarter profits plummeted 78 per cent on a 0.4 per cent increase in revenue.

Worldwide revenue for the three months to the end of September was $4.3bn (£2.7bn), a rise of less than half a per cent on the same period last year. Net profit stood at $23m, down from more than $100m during last year's second quarter.

The vendor performed strongly in its native China, where revenue was up 11 per cent to $1.9bn. This was counteracted by results in the Americas and Asia Pacific, where shipments fell four and ten per cent respectively. There was better news for Lenovo in EMEA, where revenue stood at $890m and PC shipments spiked 18 per cent.

Chairman Yang Yuanqing said: "Due to the impact of the global economic downturn, and a shortfall in the execution of our strategic plan, Lenovo's performance in the second quarter did not meet our expectations. Going forward, we will address the situation by optimising our operating structure to improve efficiency and reduce expenses, to increase our focus on execution, and to accelerate growth in emerging markets and the consumer sector."

Chief executive William Amelio added: "Under these adverse market conditions, balancing growth and profitability are equally critical. This means that we must respond by aggressively pursuing growth opportunities while continuing to manage our operating structure even more efficiently. It is important to remember that Lenovo has a strong, proven global engine for innovation, and a worldview that is built for exactly the kind of economic, social and political conditions we see today. We have a business strategy that is solid and fundamentally strong, and we intend to stay the course that has proven successful over the long term. "