Lenovo profits plunge

 

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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.

Author: Reuters