The third quarter of fiscal year 2022/2023 was not positive for Chinese company Lenovo, which reported a 24% drop in revenue.. It was the largest contraction the company had in 14 years, and the decline in global demand for electronics was one of the main reasons for this result. To deal with the situation, Lenovo announced cost cuts and adjustments to its team.

One of the world’s largest computer makers said on Friday that its total revenue for the October-December quarter was $15.3 billion., which represents a decrease of 24% compared to the same quarter of the previous year. This cost corresponds to approximately 79 billion reais at the current exchange rate.

As if the news wasn’t bad enough for Lenovo, it turned out to be worse than the forecast it had made and what the company had expected. This is because a group of seven Refinitiv analysts estimated that the manufacturer would raise $16.39 billion over that period, but that didn’t happen in the end.

The pandemic is partly to blame

In 2020, Lenovo and other companies around the world experienced a huge increase in e-sales due to the Covid-19 outbreak, which prompted many people to work remotely and replace or upgrade their equipment. However, demand began to fall, and Lenovo’s revenue began to decline in July-September last year.

According to Wong Wai Ming, Lenovo’s chief financial officer, the company intends to cut its operating expenses by approximately $150 million to meet the medium-term goal of doubling net income: “This includes an overall reduction in operating expenses as well as a reduction in the workforce. adjustments where necessary and appropriate,” he said.

While Lenovo said the market is still dealing with excessive inventory that could take another quarter or two to digest, Yuan Qingqing, the company’s senior vice president, argued that device activation data shows real demand not as bad as it seems. According to him, the PC market is expected to resume growth from the second half of the year.

Tablet sales are falling globally, but Apple continues to sell its iPads well
Despite Apple’s growth in the market, Samsung, Huawei, Amazon and Lenovo are facing declining positions.

Via: Reuters

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