Computer Electronics

Lenovo Sales Rise as HP Falters

23 May 2013

Slow demand in the PC market is dragging down computer makers and component suppliers alike. Yet one PC maker, Hong-Kong based Lenovo, is thriving in spite of the market environment.

For its fiscal fourth quarter ended in March, Lenovo reported record revenue of $7.8 billion, with an earnings increase of 90 percent to $127 million. Competitor Hewlett-Packard reported a 10 percent decline in sales for its fiscal second quarter, ended in April, to $27.6 billion.

A number of factors go into a company’s performance for any given quarter, but Lenovo has a couple of advantages in the current market environment. First, it is selling a lot of its products into its own backyard: the Asia-Pacific market.

China rose to the top of the PC market for the first time ever on an annual basis last year, relegating the U.S. to second place with a lead of more than 3 million units, according to IHS. PC shipments in 2012 to China totaled 69 million units, exceeding the 66 million shipments in the U.S. Only a year earlier, the United States was the leading market for PCs.

Lenovo grew its number-one PC market share position in China, the world’s largest PC market, to 31.7 percent, up 1.7 points year over year, the company reported in a release.

Lenovo is evolving a unique supply chain model that involves shifting its IT systems – inherited through several acquisitions, including IBM’s PC business – to the cloud. Lenovo uses a platform provided by E2open to share real-time data within its operations. The platform also enables supply chain partners to link with Lenovo without a lot of upfront IT configuration. The company has reduced the time it takes to communicate internally and externally and has significantly reduced IT costs.

HP, in the meantime, is undergoing a restructuring to trim costs from its operations. “We beat the upper end of our non-GAAP diluted EPS outlook for the quarter by $0.05 per share, driven by better than expected performance in Enterprise Services and Printing, coupled with the accelerated capture of restructuring savings and improvement in our operations," said HP President and CEO Meg Whitman in a release.

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