Profitability some way off for Lenovo’s mobile and data centre businesses
Chinese technology titan struggles to convince analysts it’s moving in the right direction
Analysts say Lenovo still has some way to go until its struggling mobile and data centre group (DCG) businesses turn a profit, despite the Chinese technology titan recording improved group figures for its second fiscal quarter, ended September.
The world’s largest personal computer manufacturer by shipments last week said net profit for the quarter came in at US$157 million, excluding one-off items, rebounding from a US$714 million loss in the same period last year.
During the period, it booked a gain of $205 million from the disposal of a property in Beijing, but also incurred US$136 million in restructuring charges related mostly to the restructuring of its Motorola mobile business.
However, losses at the company’s DCG, which includes servers, storage, software and services and is considered by the market as arguably its most promising future growth driver, more than doubled to US$141 million in the second fiscal quarter, up from US$64 million the previous quarter, amid what it called intense competition in China and overseas markets.
The company’s management insisted it will continue investing in the DCG, and expects it to remain in the red for the next two quarters.
Lenovo said that the data centre business is in the middle of integration and transformation and it will enlarge its investment in sales channels and products.
