Lenovo sales up 9% as Americas return to profit

Lenovo Group said its business in the Americas returned to a profit in the first calendar quarter, helped by cost-cutting efforts and a 9% increase in PC shipments.

The results announced Wednesday offer a bright spot for the computer maker, which recently dropped to fourth place in the global PC rankings, faced with faster growth by rivals Acer and HP.

Lenovo's overall revenue for the quarter -- the fourth of its fiscal year -- climbed 9% from a year earlier, to US$3.4 billion, helped by improved sales in all parts of the world, it said. Net profit was $60 million, up from a loss of $116 million in the same quarter in 2006.

Business was strongest in China, as usual, where PC shipments grew 24% from a year earlier. Shipments grew 18% in the rest of Asia Pacific, 14% in Europe and 9% in the Americas, the company said.

Worldwide, PC shipments growth was 17%, which Lenovo said was well ahead of the industry average. The trouble is, it was not faster than Acer and HP, which increased their shipments by 46% and 29%, respectively, according to Gartner. That put HP at the top of the worldwide rankings, followed by Dell and Acer, pushing Lenovo into fourth place. IDC, another analyst company, had Lenovo and Acer sharing third place.

To increase growth Lenovo hopes to sell more computers through its Web site to home users and small businesses. It has rolled out that model in Germany, France, Italy and the U.K., boosting sales there considerably, it said. It will now push that same model in other parts of the world, including the United States, Japan and Eastern Europe.

The company has also announced plans to cut its global workforce by 5%, or 1,400 workers, to help improve profitability.

Greater China accounted for 38% of overall sales in the quarter, followed by the Americas with 28%, Europe, Middle East and Africa with 21%, and the rest of Asia Pacific with 13%.

Lenovo also announced Wednesday that Mary Ma, its CFO of seven years, has retired from the job effective immediately. Ma, 54, was described as one of the chief architects of Lenovo's purchase of IBM's PC division in 2005. She will be replaced by Wong Wai Ming, chairman of the Lenovo board's audit committee.

The IDG News Service is a Network World affiliate.