Tag: lenovo

Lenovo posts strong profits, beats forecasts

lenovo_hqLenovo has bucked the trend with a stellar quarter, which saw the outfit’s profit and market share soar.

Lenovo reported its earnings on Wednesday and its net profit in the October – December fiscal quarter was $204.9 million, up by a third from a year earlier. Analysts had expected Lenovo to post $178 million net profit, but the outfit outperformed even the most optimistic forecasts. In fact, Lenovo exceeded its previous record of $172, posted back in 2007, before the credit crunch and PC slump.

The company is still trailing Hewlett Packard in terms of global PC market share, but according to IDC, it is narrowing the gap. What’s more, Lenovo is diversifying beyond the PC market and its smartphones and tablets are making their presence felt in China. The same can’t be said of HP, which apparently still thinks it can grow its business by peddling toners and overpriced printer ink.

Although Lenovo phones are somewhat of an oddity in western markets, Lenovo’s mobile business saw its revenues jump 77 percent in the Chinese market, almost hitting the $1 billion mark. So although western consumers don’t see them, Lenovo phones seem to be doing rather well. The company’s mobile internet and digital home business accounted for about one tenth of revenues during quarter and  Lenovo claims its China smartphone business reached profitability for the first time.

Lenovo’s core business is doing fine and its focus on mobile seems to be paying off, at least in China. Lenovo’s Android tablets aren’t big sellers in the west, but they aren’t lemons, either. What’s more, Lenovo is starting to offer an increasing number of high-end ThinkPad tablets on top of its bland Android offerings. It is also in a good position to capitalize on Windows 8 tablets and hybrids. Although the Android tablet market will probably remain dominated by Asus and Samsung, Lenovo might carve out a high-margin niche in Windows 8, if it plays its cards right.

Acer suffers in weak PC market, moves to ditch value brand

acer-logo-ceAcer is taking a beating on the back of a slow PC market and fears that it expanded too much, too quickly.

The Taiwanese outfit is the fourth largest PC maker in the world, and it peaked in 2010, when it briefly ranked second. However, things have gone downhill and on Wednesday Acer announced it expects to post a full-year net loss for the second consecutive year. It is also looking at a $120.1 million write-down on several value brands under its umbrella.

During the PC boom in the late nineties and early 2000s, Acer went on a massive shopping spree and picked up a number of value brands, including Packard Bell, Gateway, eMachines and E-Ten. The write down on said brands dragged Acer to a net loss and the company plans to discontinue the eMachines brand altogether.

Other PC makers are facing similar challenges, as they struggle to reinvent themselves and gain a toehold in emerging sectors, like smartphones and tablets. Acer has a small presence in both sectors.

The company’s phone business is practically negligible and its attempt to expand its presence in China in 2012, with smartphones based on Aliyun, a heavily customized Android-based OS, was promptly ditched after Google threatened to cancel the company’s Android license. Acer had a bit more luck with Android tablets and it is moving into the Windows 8 tablet space as well, but its efforts have been overshadowed by the likes of Asus and Samsung.

Even as it struggles to remain competitive in the PC market, burdened by underperforming value brands, Acer prospects in the heavily contested smartphone and tablet markets look even bleaker.

Brokerage houses Nomura Holdings and UBS are anything but optimistic and UBS cut its target price and maintained the “sell” rating on Acer stock after the report. Nomura was somewhat kinder, but it also maintained its “reduce” rating on Acer, Taipei Times reports.

“Longer term, we think Acer still needs to face the reality of how to rebuild the brand positioning/image for Packard Bell and Gateway amid intense competition and slowing PC industry growth,” said Nomura analyst Eve Jung.