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Investors Unimpressed as Lenovo Margins Improve

By Yang Ge / Nov 07, 2019 03:55 PM / Business & Tech

Photo: VCG

Photo: VCG

Lenovo is back on track.

That’s the message coming from the world’s top PC maker, which has just reported improving profitability as its core computer business comes back to center stage.

Lenovo said its profit for the three months through October jumped 20% to $202 million, while its revenue just managed to eke out a small 1% gain to reach $13.5 billion, according to its latest quarterly report released on Thursday. It achieved the strong profit gains on improving margins, with gross profit margin rising more than 2 percentage points to 16.1% in the latest quarter.

The company made the gains as it returns to its roots as a PC specialist, following a difficult period when it struggled to become a global smartphone leader as well. Its mobile business contracted by 7% in the six months through October to just over $3 billion, meaning it now accounts for just over 10% of Lenovo’s total revenue.

“The group’s mobile business has delivered on its promise to maintain profitability for four quarters and continued to expand its profitability on a year-on-year basis,” Lenovo said.

Lenovo’s shares briefly jumped as much as 2.6% when trading resumed after the results came out midway through the trading day. But then they quickly gave back all of those gains and were down 1.2% halfway through the afternoon session. Still, the stock is up about 20% year-to-date, after touching a nine-year low last year at the height of the company’s difficulties.

Related: Lenovo Quarterly Profits Surge on Improved Margins

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