Lenovo News Worth Reading!

Cost Cuts Push Lenovo Profit Up 198 Pct.
By JOE McDONALD,
AP
Posted: 2008-01-30 23:19:09
BEIJING (AP) - Lenovo Group, the world's No. 4 personal computer maker, said Thursday that profit in its third fiscal quarter rose 198 percent and forecast strong sales this year despite a possible U.S. economic slowdown.

Driven by strong sales and aggressive cost-cutting, profit for the three months that ended Dec. 31 was $172 million, or $1.93 per share, on revenue of $4.6 billion, Beijing-based Lenovo said. That was below the average $253.5 million expected by analysts polled by Dow Jones Newswires.

In 2008, Lenovo expects double-digit sales growth despite a possible U.S. slowdown, due to its bigger presence in faster-growing markets such as China and India, Chief Executive William J. Amelio said.

"We have such a good base in other geographies, we have a great way to insulate ourselves from some of the downturn that may occur in the United States," Amelio said in a conference call with analysts.

Also this year, Lenovo will stop using the IBM name as it tries to establish itself as a global brand, Amelio said. Lenovo has had rights to the name since acquiring IBM Corp.'s PC unit in 2006 but has been selling a growing number of products under its own brand.

Lenovo's home China market was its biggest revenue source for the quarter, but sales in the U.S., Europe and elsewhere in Asia also grew.

Sales in China rose 16 percent to $1.8 billion, or 40 percent of the total, the company said.

Lenovo is facing growing competition in its home market from industry leader Dell Inc., which is marketing a low-cost PC designed specifically for China's huge but poor rural market.

Revenue in the United States and the rest of the Americas rose 15 percent to $1.2 billion, the company said. Sales to Europe, Africa and the Middle East rose 24 percent to $1.1 billion.

Notebooks were the strongest part of Lenovo's portfolio, with quarterly sales up 38 percent to $2.6 billion, or 56 percent of total sales, the company said.

Lenovo achieved "aggressive cost savings," slashing production expenses per unit by 13 percent in the third quarter as part of a long-term effort to streamline production, Amelio said.

The IBM PC unit was a premium, high-cost manufacturer, but Lenovo has been pushing to bring expenses in line with more efficient rivals such as Dell. Lenovo has moved U.S.-based engineering jobs to China and made other cuts.

 

Kool man. Mind providing us with the link?

 

I'm sure orders will skyrocket with the advertising related to the Olympics.

 

Hmm.. The IBM's were made in factories in Asia the same as Lenovo is using now - I wonder how you slash production expenses 13 percent...

 

"Lenovo has moved U.S.-based engineering jobs to China and made other cuts."

Uh=0h............

 

not worth, that´s bad news!

Regrards

A. Gotthelf

 

great news for Lenovo now hopefully prices go down more

 

Do you work for Lenovo? I haven't read anything like this. What I have read is that they now use the Lenovo supply chain, which is much better than IBM's. For the last 7 years that IBM owned Thinkpad, they didn't give a damn about it. Only PC sales they were interested in was when they were bundled with a big services contract...would you like fries (e.g. PCs) with that $50M Services contract? They have also reduced the number of system variations and parts...which saves a ton of money. Plus, they sell a ton more Thinkpads now than were sold by IBM...so you get economies of scale.

There were also layoffs, since in some cases, there were Lenovo employees already doing the same jobs that IBMers were doing who joined Lenovo in the buyout. I use a Lenovo Thinkpad T60p at work. Before that, I used a T42p, an A31p, and a 600. My current T60p look similar, feels the same and is just as reliable as all the ones I've used before. As far as I can tell, the quality of Thinkpad hasn't changed...just the logo.