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Chinese Lenovo warned about an increase of expenses, fixing a quarterly loss

Chinese manufacturer of personal computers Lenovo Group Ltd, which reported on the first quarterly loss for almost two years on Friday, warned about increased costs and marginal pressure due to the shortage of such PC components as memory chips.

20.Aug.17 1:57 PM
By Daria Zaytseva


Chinese Lenovo warned about an increase of expenses, fixing a quarterly loss

Lenovo, ceding the title of the world's largest PC manufacturer HP Inc. for the quarter ended June, suffered a loss of $ 72 million compared to a profit of $ 173 million for the same period a year earlier.

The company recorded a quarterly loss for the first time since September 2015 and did not meet the expectations of analysts who forecast a profit of $ 5.29 million, resulting in Lenovo shares declined during Friday trading by 3.4 % to HK $ 4.56.

The forecast for the rest of the year looks ambiguous, as the lack of PC components will lead to an increase in costs and, perhaps, will force the company to increase sales prices to protect profit margins, Lenovo management notes.

Deliveries of Lenovo PCs for the quarter decreased by 6 %, while on the average, in the world market the decrease was 3 %. Revenues from PC sales remained unchanged at $ 7 billion.

Despite the ambiguous forecast, the chairman and CEO of the company, Yan Yuanqing, optimistically assesses the prospects for margin indicators and business development of mobile devices.

The loss in the division of mobile devices Lenovo narrowed, and revenue grew by 2 % to $ 1.75 billion for the quarter. This is the only division of the company in which revenue growth was recorded. The total revenue of the company has not changed, amounting to $ 10 billion.

Despite the 11% drop in revenue, Yang said that he expects the company to return to profitability in two years.

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