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Lenovo shipped 18.7 million smartphones in Q4 ’14, a new company best

Lenovo has recorded its highest ever quarterly and yearly smartphone shipments, but expensive acquisitions are denting the company's profits.

Published onMay 21, 2015

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Lenovo has just released its financial report for Q4 2014 and last year, and it’s a bit of a mixed bag for the Chinese technology company. Sales records were broken last quarter, but profit levels have been up and down.

The company acquired Motorola last year and the latest data includes combined sales of both brands. This has helped the company breach its previous sales figures, resulting in 18.7 million smartphones shipped in Q4. From the total, 7.8 million smartphones came from Motorola. For the entire year, Lenovo states that it has shipped 76 million smartphones, another record for the company, which brought in around $9.14 billion in revenue for the year and $2.8 billion for the quarter.

PC sales were also up despite the overall decline in global sales, reaching a record 60 million units for the financial year. It’s impressive that the company’s smartphone sales have now eclipsed its industry leading PC business.

Despite the positive sales, Lenovo saw its quarterly profit decline by a substantial 37 percent in Q4.
Despite the positive sales, Lenovo saw its quarterly profit decline by a substantial 37 percent in Q4. Annually, the company saw its net profit rise by a single percent to $829 million, which fell short of analyst expectations.

However, this can be accounted for by Lenovo’s expensive acquisitions of IBM’s low-end server unit and Motorola, which cost $2.1 billion and $2.9 billion respectively. Motorola, which Lenovo purchased in late 2014, has not turned a profit quite yet, but is expected to return to profit by mid-2016.

“In view of the opportunities and challenges of the new Internet+ era, we are ready to transform ourselves from making mostly hardware to a combination of hardware and software services,” – Lenovo CEO Yang Yuanqing

The company may also be showing signs of suffering from the slowdown in China’s mobile market. China, which is Lenovo’s largest single market, is showing signs of saturation, as shipments reportedly declined by 4.3 percent in the last quarter.

Lenovo appears to be hedging its position against the saturated PC market. The acquisition of Motorola and an IBM unit suggests that the company sees further potential in the smartphone and enterprise markets, and not necessarily just in terms of hardware.

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