HONG KONG, Aug 18: Chinese technology giant Lenovo today reported higher profits in the first quarter thanks to cost cutting, but sales of PCs and smartphones continued to struggle.
The company’s share price rose 3.55 per cent to HK dollar 5.54 in morning trade after it announced net profit was up 64 per cent year on year at USD 173 million.
However, revenue sank six percent to USD 10.1 billion due to slowing sales in its PC and fledgling mobile handset businesses.
The Beijing-based company, which has traditionally manufactured computers, has been trying to broaden its smartphone business as the market for personal computers fizzles.
But it has struggled to keep pace with Apple and Android rivals.
Revenues from its PC and smart device business, which includes tablet computers, dropped seven per cent to USD 6.99 billion.
Its mobile business also fell six percent to USD 1.71 billion and the division reported an operational loss of USD 163 million.
However, the company said its PC business was “better than expected” citing a global market decline of four percent, while its smartphone business “stabilised”.
It protected profit margins by reducing operating expenses by 17 per cent year-on-year to USD 1.29 billion in the first quarter.
“Lenovo managed to deliver profit growth from its businesses, driven by efficiency improvements,” Yang Yuanqing, the firm’s chairman, said in a statement.
The firm announced plans to slash costs by USD 1.35 billion and cut 3,200 staff from its non-manufacturing workforce in August last year.
The company purchased IBM’s low-end server business in 2014 as part of a strategy to expand business beyond PCs. (Agencies)
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