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Lenovo: when a 26% drop in phone sales represents an improvement

Lenovo's third quarter performance is the kind of terrible that makes a 26% decline in smartphone shipments look like a win.

Published onFebruary 16, 2017

Lenovo has posted its third quarter financials, revealing a disheartening 67 percent drop in profit year-over-year. Meanwhile, its mobile division saw an improvement over its first and second quarter performance; but that “improvement” took the form of a 26 percent decline in smartphone sales.

In the first quarter of the 2016/17 financial year, Lenovo’s Mobile Business Group (MBG) saw a massive 31 percent decline in smartphone shipments. The second quarter saw that decline shrink to 28 percent year-on-year. Now, it’s down to 26 percent. So while that is undeniably “progress” it’s definitely a brand of “least worst” progress.

Lenovo misjudged what it would take to revive the Moto brand

Lenovo is blaming a weak macroeconomic environment, component supply constraints and struggling global market as the cause of its performance. Gartner reports five years of consecutive decline for the global PC market, even while Lenovo’s PC division saw a 2 percent increase in revenue, its first increase in almost two years.

Lenovo reported $12.2 billion in revenue, a drop of 6 percent. Profit fell to just $98 million for the quarter, far below the $300 million from this time last year and the almost $160 million analysts were predicting.

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