Lenovo profits plunge

 

Gallery

By Reuters

Posted on 7 Nov 2008 at 16:52

Lenovo has posted a 78% plunge in quarterly earnings, as the economic downturn takes a bite out of the company.

The Chinese PC maker earned a net profit of $23.44 million in its fiscal quarter ended in September, compared with $105.26 million a year earlier.

Despite the results, analysts say Lenovo should thrive in the long run due to its commanding share of the lucrative Chinese market. This command saw it derive $1.9 billion of its $4.3 billion in sales from China during the quarter, with $1.1 billion arriving from the Americas.

The US has been Lenovo's second-largest revenue contributor since it bought IBM's PC unit for $1.25 billion in 2005. However, its performance has been hit by sluggish consumer appetite.

"Slowing commercial demand and aggressive pricing impacted the group's profitability in the geography," says Lenovo in a statement.

Considering acquisitions

Lenovo claims it is still considering acquisitions after Acer beat it in a race to buy Europe's Packard Bell last year.

Sources suggest Lenovo is currently in talks with Fujitsu, that could see the Chinese company buy Fujitsu's consumer laptop and desktop business.