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Lenovo: Smartphone and server business provide for loss

Friday, August 18th, 2017 | Gadgets

The strong competition in the PC market and persistent difficulties in the smartphone and server business have pushed the Chinese manufacturer Lenovo surprisingly into the red numbers. In the first quarter of April to June 2017 the once world's largest PC producer recorded a loss of 72 million US dollars with stagnating sales.

Lower price for the Lenovo share
A year earlier, the company had earned 173 million US dollars. He then recorded the first shortfall after six quarters with profits. Analysts also expected a surplus this time. On the Hong Kong stock exchange, the share price fell by more than 4 percent to the lowest level in more than one year. Sales were unchanged at around 10 billion US dollars.
"The sharp rise in our costs has put us in all three divisions," said Group CEO Yang Yuanqing. After prominent takeovers, Lenovo has not managed its Smartphone and server business so far. The company had bought Google's mobile phone maker Motorola and took over part of the server party from IBM.
So far, three million Moto-Z smartphones sold
But Lenovo's smartphone business continues to bring losses. After all, the company could achieve the self-imposed goal of selling three million Moto-Z smartphones within one year. Compared to the competition, the modular smartphones continue to be a small market. The loss of the smartphone business could reduce the loss from $ 163 million to $ 129 million.
Difficulties in delivery, rising costs and an aggressive competition make the group hard in the server business. Here, the loss has increased from 31 million US dollars to 114 million US dollars. In addition, Lenovo has also lost its footing in the PC core business. The former global number one lost its top position and was eventually overtaken by the US competitor HP.

Lenovo now plans to invest 1.2 billion US dollars in new technologies like artificial intelligence, the Internet of Things and virtual realities in the coming years. In the mobile phone segment Lenovo continues to rely on the Motorola brand.

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