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China Lenovo says profitable in 2010
BEIJING - Lenovo Group, the world’s fourth-largest PC maker, said on Tuesday it would focus on China and other emerging markets and low-cost personal computers as the route back to profitability in 2010.
Chairman Liu ChuanzhiHe forecast further losses this calendar year and ruled out dividends for fiscal 2009 and 2010. Paying dividends from cash reserves would not be appropriate, he said.
“We should see a profit in 2010, and from there the situation will begin to improve,” Liu told Reuters in an interview, without specifying in which quarter the company will likely turn the corner.
Liu returned to the company he founded 25 years ago when he was named Lenovo’s chairman last week, just days after it posted a $96.7 million quarterly loss, its first in three years, and reshuffled top management.
Lenovo posted the smallest growth last year of the world’s top four PC makers. Its shipments grew 8 percent, compared with a 53 percent gain for Acer, 13 percent for Hewlett-Packard and 11 percent for Dell.
Lenovo had around 7.5 percent of the global PC market in 2008 when it was overtaken as the No.3 player by more aggressive Acer, according to research firm IDC.
“The financial crisis has had a more profound impact on developed countries,” the 65-year-old Liu said.
“While in China, things are different,” he said, from his offices at state-owned Legend Holdings, which owns about 42 percent of Lenovo.
Liu said Beijing’s huge 4 trillion yuan ($586 billion) stimulus package aimed at boosting domestic consumption will help Lenovo extend its dominant position in China.
“China’s market opportunities are growing along with the more favourable stimulus measures,” he said.
He said Lenovo expects to begin making a profit in 2010 and acquisitions would be an important part of his strategy in expanding in emerging markets.
Of the 17 analysts polled on Lenovo by Reuters Estimates, 11 had a “sell” or “underperform” recommendation.
IDC said worldwide PC shipments would rise 3.8 percent in 2009 -- while analysts estimate that Lenovo will continue to see a 15.3 percent fall in sales—implying a further eroding of its global market share.
Analysts expect Lenovo to rack up more losses in four of the next five quarters, hitting bottom in the current quarter with a $153.6 million loss.
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