Yang Yuanqing finally breathed a sigh of relief.
For a long time in the past, the chairman and CEO of Lenovo Group has suffered from a lot of unsatisfactory public opinion pressures and accusations. In the face of pressure, he promised in the second half of 2017 that “the company will soon move to a profitable growth trackâ€. After the announcement of the new quarterly earnings report, Yang Yuanqing said to the 21st Century Business Herald reporter that "the heart is solid."
On February 1, Lenovo Group (00992.HK) released its third quarter results for the 2017/18 fiscal year. According to the report, as of December 31, 2017, the company achieved revenue of 34.712 billion US dollars in the first three quarters, a year-on-year increase of 4%, and single-quarter revenue increased 6% to 12.9 billion US dollars, the highest in the past three years and the most recent history. Good level.
In terms of profit, subject to the US tax reform bill, Lenovo's one-time non-cash total of $400 million in deferred income tax assets in the quarter shrank, resulting in a net loss of $222 million in the first three quarters and a net loss of $289 million in the quarter. However, Yang Yuanqing stressed that this has nothing to do with the daily operations of Lenovo Group - in fact, Lenovo's third-quarter profit before tax reached 150 million US dollars, a 48% year-on-year increase, which is the first time in five years that Lenovo achieved its pre-tax profit year. Year-on-year growth.
Yang Yuanqing said: "During the transition, enterprises will be under pressure in the short term, but they only need to know what areas to improve, and continue to carry out infrastructure construction, team building, technical capacity cultivation, etc., and the performance of the financial report will be a matter of course."
The third wave of business entered the growth track
In Yang Yuanqing's view, Lenovo's performance has begun to enter a continuous upward channel.
In the personal computer and smart device business, Lenovo's revenue in the first three quarters reached US$24.638 billion, up 5.31% year-on-year; single-quarter revenue rose 8% year-on-year to US$9.25 billion, accounting for 72% of the group's revenue. Lenovo said that the strong revenue performance of the business was mainly due to innovative products and a better product mix, resulting in an increase in average selling prices.
In terms of data center business, Lenovo's revenue in the first three quarters fell slightly by 1.46% year-on-year to US$3.172 billion, but single-quarter revenue led the past two years to $1.225 billion. In other businesses such as Lenovo Venture Capital, Lenovo's revenue in the first three quarters increased by 10.57% to US$1.004 billion.
"Lenovo's third wave of business (smart devices + cloud) is on the growth track. For example, the AR smart helmet Mirage released by Lenovo this quarter has sold nearly 500,000 units in a single season. Other emerging devices are also on display at this year's CES. Including smart assistant Lenovo Smart Display, integrated VR helmet Mirage Solo, VR camera Mirage Camera, etc. We have confidence in the profit growth of this piece," Yang Yuanqing said.
It is worth noting that the overall performance of Lenovo Group's mobile business remained sluggish. The revenue of mobile services in the first three quarters was US$5.899 billion, down 0.62% year-on-year, and the single-quarter revenue fell 5% year-on-year to US$2.076 billion. In stark contrast, Lenovo's non-core devices (ie AR/VR, artificial intelligence related equipment) revenue reached $170 million, an annual increase of 123%. Between one low and one high, will it mean that Lenovo’s future focus will be more on the latter?
"Lenovo will not ignore the two major markets of PCs and smartphones, especially PCs will remain ahead of the curve to ensure that they continue to be Lenovo's profit engine." Yang Yuanqing said. However, he also pointed out that the market growth of smartphones is becoming saturated, especially in the Chinese market. Therefore, the strategic investment of Lenovo smartphones will mainly fall in Latin America and some mature markets such as North America.
As for the emerging terminal equipment, Yang Yuanqing admits that he will put more effort into it, "including AR/VR and artificial intelligence-driven terminal devices, which can occupy every consumer's family." Yang Yuanqing said, "When investing resources, we will Consider balancing and consider what kind of smart terminals can generate greater growth in future performance."
"The combination of equipment and cloud computing with artificial intelligence thinking, this strategic direction is right." Lin Xinliang, chief analyst of IHS Markit, told 21st Century Business Herald, "In this field, Lenovo has the hardware strength of cloud computing and also has smart devices. The hardware strength. However, in the good mix of cloud services and smart devices, and enhance the user software level experience, etc., will be the key to further development of Lenovo in the future."
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"The performance of the personal computer business is strong, the data center business development exceeds expectations, the 'equipment + cloud' business is developing positively, and the strategic shift from distribution to channel to direct profit-oriented, which constitutes Lenovo's quarterly revenue and The profit before tax increased double." Lin Xinliang said.
Behind business growth is driven by a series of changes. Yang Yuanqing pointed out that Lenovo Group is transforming from a single business model to a platform that operates multiple business models, from a product-oriented company to a customer-oriented company, and enhances the overall customer experience.
“In the past year, 10% of our assessments for each department and each position were used to assess customer satisfaction. In the next year, this proportion will increase to 20%. These are essential to drive business transformation and improvement. Function." Yang Yuanqing said.
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