Lenovo: An ugly picture of the PC world
May 22nd 2009 8:00AM
Updated Dec 3rd 2009 11:35AM
Although it is one of the largest PC companies in the world, Lenovo's earnings often go unnoticed. Perhaps that is because the firm is based in China, or perhaps it is because it no longer uses the IBM (IBM) brand on its PCs, a brand that it picked up when it bought IBM's small computer operation.
Lenovo not only posted poor results for the last quarter but, in contrast to Intel (INTC), which says the PC market is bottoming, the Chinese company also predicts the year ahead will be hard.China's largest PC firm posted a loss of $264 million in the quarter ending March 31. Part of the red ink was due to write-offs. More importantly, Lenovo's sales fell 26 percent to $2.8 billion.
According to The Wall Street Journal, Lenovo feels the global recession "has significantly affected the world-wide PC-market demand as many large enterprises delayed purchase decisions" and reduced information-technology budgets. "Even the growth of the China PC market has slowed," Lenovo says.
The most disturbing part of the news is the trouble in the Chinese market. U.S. companies like Dell (DELL) have been counting on revenue from the world's most populous country to offset slow sales in the U.S. and Europe. It appears that those hopes are fading.
Douglas A. McIntyre is an editor at 24/7 Wall St.