Lenovo revenues soar 12% to record high; CEO wants US, China to settle trade issues

MORRISVILLE – Lenovo Chair and CEO Yang Yuanqing recently told employees at the tech giant’s annual kick-off meetings that revenues had topped $50 billion and the “intelligent transformation” of the company was driving growth. Thursday, Lenovo affirmed the growth despite growing trade war with China where most of the company’s operations are based.

“We definitely don’t want to see this situation,” Chairman and Chief Executive Officer Yang Yuanqing explained to Reuters news service. “We’ve always said we wish the two governments can get the agreement as early as possible.”

Since Lenovo produces and sells products in a number of different countries, including the US, tariffs are not as big an issue as they are for other firms, according to the company. Yang also told Reuters that the company has contingency plans to move some production outside of China if the trade war worsens.

Lenovo’s foldable laptop. (Lenovo image)

Despite the trade issues, the company continues to roll out new products such as a “Smart Clock” tied in to Google Assistant and including a touchscreen while unveiling a foldable PC that’s under development, sales of many existing products are climbing. But the earning news didn’t spark much enthusiasm from investors as shares declined some 5 percent.

And helping turn red to black on the earnings sheet were profitable performances by both its RTP-based Data Center Group and its mobile device units. It’s the first time that all Lenovo units reported profitability since Lenovo spent billions acquiring IBM’s x86 server business and the Motorola smartphone group from Google in 2014 for some $6 billion.

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Data Center Group sales soared 37 percent year-over-year to more than $6 billion.

Leading the way was a near double-digit growth in PC and related sales at some $38.5 billion. Lenovo is either No. 1 or No. 2 in global PC sales based on various reports and its market share tops 23 percent.

Lenovo’s investments in startups also paid off with exits delivering more than $100 million in returns, the company noted.

In Hong Kong where Lenovo shares are traded, Lenovo disclosed its annual revenues hit $51 billion, the first time the company has crossed that threshold. Income rose some 12.5 percent year-over-year with profits hitting $597 million.

Fourth-quarter sales and revenue wrapped up the year by growing more than 10 percent to $11.7 billion.

“Lenovo’s solid financial performance is the result of persistent execution of our transformation strategy,” Yang said in a statement.

“At a time of great global change – economically, socially and environmentally – we continue to focus on how we ‘intelligently transform’ ourselves and enable our many customers around the world successfully to do the same. I am proud of our strong results and confident in how we will climb to new heights in the future.”