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(Updates stock price in paragraph 8)
Josh Ye
HONG KONG (Reuters) – China’s Lenovo Group, the world’s largest personal computer maker, reported on Thursday revenue of $15.72 billion in October-December, up 3 percent on the year.
The results compared with an average forecast of $15.25 billion by eight analysts compiled by London Stock Exchange Group (LSEG).
In 2022, revenue began to shrink as the boom in demand for PCs and other electronics brought about by COVID-19 ended. Lenovo then recorded five quarters of revenue declines, with analysts predicting growth in the sixth quarter.
Net profit attributable to shareholders fell 23% from October to December to $337 million, compared with analysts’ expectations of $309 million.
Research firm Gartner reported in January that Lenovo’s third-quarter PC shipments grew 3.2% compared with the same period last year. Industry-wide PC shipments also rose 0.3%, reflecting the market’s recovery after nearly two years of decline.
Gartner data shows that Lenovo controlled 25.6% of the global PC market during this period, with HP, Dell and Apple ranking second, third and fourth respectively.
The PC maker is working to improve profitability by expanding its non-PC business, most notably selling information technology services to businesses. Revenue in its services business unit grew 10% to $2 billion.
Lenovo’s shares rose nearly 2% after the earnings report was released, while the benchmark Hang Seng Index rose 0.8%.
Investors have been buying Lenovo shares over the past 12 months, in part because of potential demand for “AI PCs,” or personal computers optimized for running artificial intelligence software. At that time, Lenovo’s stock price rose by more than 25%.
On Thursday, Lenovo said artificial intelligence computers — including those capable of running AI applications without being connected to the Internet — will be a strategic priority for the foreseeable future. Last year, it launched more than 10 PCs with artificial intelligence capabilities at CES.
“Looking ahead, our commitment to AI innovation, our full portfolio of pocket-to-cloud computing capabilities, smart devices, smart infrastructure, smart solutions and services, coupled with our strong partnerships with other key leaders in AI, This partnership will ensure that we are fully prepared to seize the huge opportunities in the field of artificial intelligence.” CEO Yang Yuanqing said.
According to data from research firm IDC, AI PC shipments may reach 50 million units this year and will more than triple to 167 million units by 2027, accounting for nearly 60% of total shipments. Lenovo, which owns the Motorola smartphone brand, is also developing smartphones with artificial intelligence capabilities. This month, Reuters reported that Lenovo had partnered with Chinese search engine leader Baidu to equip its phones with Baidu’s large-scale language model “Ernie.” IDC data shows that shipments of smartphones supporting artificial intelligence may reach 170 million units this year, accounting for 15% of the market share.
(Reporting by Josh Ye; Editing by Christopher Cushing)
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