Chinese manufacturer of personal computers – Lenovo Group Ltd, which reported on the first quarterly loss for almost two years, warned about increased costs and marginal pressure due to a shortage of such PC components as memory chips.
Lenovo, ceding the title of the world's largest PC manufacturer to HP Inc. for the quarter ended in June, suffered a loss of $ 72 million compared to a profit of $ 173 million for the same period a year earlier.
The company recorded a quarterly loss for the first time since September 2015 and did not meet the expectations of analysts who forecast a profit of $ 5.29 million. As a result, Lenovo shares fell during Friday trading by 3.4% to HK $ 4.56.
The forecast for the rest of the year looks ambiguous, as the lack of PC components will lead to an increase in costs and, perhaps, will force the company to increase sales prices to protect profit margins, Lenovo management notes.
"The cost of most components is stabilized, except for memory chips, and prices are still growing," said Lenovo's chief operating officer Gianfranco Lanci.
According to him, the price increase for memory chips will continue "at least until the end of the year," although at a slower pace than in the previous two quarters.
Sales of Lenovo PC for the quarter fell 6%, while the average indicator at global level declined 3%. Revenues from PC sales remained unchanged at $ 7 billion.
Despite the ambiguous forecast, the chairman and CEO of the company, Yang Yuanqing, is optimistic about the outlook for margin indicators and business development of mobile devices.
The loss in the division of mobile devices Lenovo narrowed, and revenue grew by 2% to $ 1.75 billion for the quarter. This is the only division of the company which recorded a revenue growth. The total revenue of the company has not changed, amounting to $ 10 billion.
The Lenovo division, which offers solutions for data centers, suffered a loss of $ 114 million against a loss of $ 31 million a year earlier. Despite the 11% drop in revenue, Yang said that he expects the company to return to profitability in two years.