Revenue for the world’s largest PC manufacturer Lenovo fell for the third straight quarter as global demand for personal computers continues to fall, but the company is not worried, said chief financial officer Wong Wai-Ming.
“We’re number one in PC. It’s clear that when the market actually returns to more normal, we will definitely grow,” Wong Wai-Ming, chief financial officer at Lenovo, told CNBC.
He added that the company is actually seeing higher growth in other businesses such as infrastructure solutions and services.
In its latest performance report on Wednesday Lenovo said it expects “the PC market to return to growth” in the second half of 2023.
The company reported a decrease in revenue during the January-March quarter. Revenue for the quarter was $12.63 billion, down 24% from a year ago and marking the third consecutive quarter of a year-over-year decline.
“Fiscal Q4 was the most challenging quarter of the year given the pressures from both the PC market and the global economy,” Lenovo said in the earnings report.
But the CFO is optimistic that its non-PC businesses – devices, infrastructure solutions as well as solutions and services – can help diversify the business.
“Our full-year revenue hasn’t actually declined that much because the other two business groups have been driving significant growth partly from the infrastructure business. The margin has also been mitigated or offset by our significant growth in our services business,” Wong said.
Lenovo’s non-PC businesses grew by 7% and now comprise almost 40% of total revenue for the full year to March. The other 60% of revenue still comes from the PC business.
“Our non-PC business revenue mix increased to nearly 40%. Our clear strategy is working, and our business is resilient, even in the face of global uncertainties,” Yuanqing Yang, chairman and CEO of Lenovo Group, said during the earnings call. . “Going forward, we will continue to invest in (research and development) to capture the next wave of growth opportunities, so we are well prepared for the future.”
PC makers benefited from a pandemic-led boom in which consumers and businesses picked up laptops, tablets and notebooks to transition from working in the office to working remotely. But when workers returned to the office, PC shipments fell.
Worldwide shipments of desktop and laptop computers fell by about 30% to 56.9 million units in the first quarter of 2023 compared to a year ago, according to IDC data.
Lenovo’s revenue from devices fell 33% year over year in the first quarter.
But Wong is optimistic about artificial intelligence driving the company’s device business. The acceleration of digitization, AI and chatbots “actually requires devices” to harness them, Wong told CNBC.
“Eventually, we will have three major business growths driving revenue rather than what we had before – just having PC as our primary driver. We will eventually have three business groups driving profitability,” Wong said.
Lenovo stock was down 1.8% in Thursday morning trading.