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Lenovo mobile breaks even after Motorola purchase

Lenovo has managed to return its mobile division to a profit after purchasing Motorola last year, meeting its four to six quarter target.

Published onFebruary 3, 2016

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Lenovo’s acquisition of Motorola has led to some major changes at the company, including a notable shift in how the two will be branded. The purchase also cost Lenovo a handsome sum at $2.91 billion, but the company’s mobile division is now on the cusp of making money again.

In total, Lenovo has announced a $300 million net profit for Q3 2015 and the company’s mobile division is also almost back to making a profit after some major restructuring. Lenovo stated that it would take four to six months to return the division to a profit after purchasing Motorola.[related_videos align=”right” type=”custom” videos=”662012,658390,665620,665516″]

Looking at mobile, shipments have fallen by 18.1 percent over the year resulting in total sales of 20.2 million units. This is partly due to a halt in the Chinese smartphone market, which barely grew at all last year. Lenovo has been improving its performance outside of China though, with other sales growing 15 percent year-on-year and sales in India up a huge 206 percent. Motorola has been doing well too, with a 25 percent jump in sales quarter-to-quarter.

In terms of cash, Lenovo’s Q3 revenue came in at US$3.2 billion from its mobile division, of which US$2 billion was contributed by Motorola. The company made a small pre-tax loss of US$30 million, an improvement on the $217 million loss in the previous quarter. The division managed to break even in terms of operating costs, only amortization pushed the group into a small loss.

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Other aspects of Lenovo’s business are rather mixed. Its PC group continues to slump, with PC profits declining 18 percent from last year, falling to a US$405 million. Although that is still a pre-tax profit for the division and the company still leads the industry with a 21.6 percent market share. The company’s enterprise division saw an 8 percent year-on-year sales boost, but still posted a small loss of US$14 million.

With a return to profitability, all eyes will now be firmly focused on the products coming out of the combined Lenovo and Motorola smartphone division.

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