Lenovo Profits increase 198%

[pphilipko]

I just wanted to share this article with you guys...I wonder what cost-cutting measures they've implemented in the thinkpad line to lower costs...

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BEIJING (AP) -- Lenovo Group, the world's No. 4 personal computer maker, said Thursday that profit in its third fiscal quarter rose 198 percent and forecast strong sales this year despite a possible U.S. economic slowdown.

Driven by strong sales and aggressive cost-cutting, profit for the three months that ended Dec. 31 was $172 million, or $1.93 per share, on revenue of $4.6 billion, Beijing-based Lenovo said. That was below the average $253.5 million expected by analysts polled by Dow Jones Newswires.

In 2008, Lenovo expects double-digit sales growth despite a possible U.S. slowdown, due to its bigger presence in faster-growing markets such as China and India, Chief Executive William J. Amelio said.

''We have such a good base in other geographies, we have a great way to insulate ourselves from some of the downturn that may occur in the United States,'' Amelio said in a conference call with analysts.

Also this year, Lenovo will stop using the IBM name as it tries to establish itself as a global brand, Amelio said. Lenovo has had rights to the name since acquiring IBM Corp.'s PC unit in 2006 but has been selling a growing number of products under its own brand.

Lenovo's home China market was its biggest revenue source for the quarter, but sales in the U.S., Europe and elsewhere in Asia also grew.

Sales in China rose 16 percent to $1.8 billion, or 40 percent of the total, the company said.

Lenovo is facing growing competition in its home market from industry leader Dell Inc., which is marketing a low-cost PC designed specifically for China's huge but poor rural market.

Revenue in the United States and the rest of the Americas rose 15 percent to $1.2 billion, the company said. Sales to Europe, Africa and the Middle East rose 24 percent to $1.1 billion.

Notebooks were the strongest part of Lenovo's portfolio, with quarterly sales up 38 percent to $2.6 billion, or 56 percent of total sales, the company said.

Lenovo achieved ''aggressive cost savings,'' slashing production expenses per unit by 13 percent in the third quarter as part of a long-term effort to streamline production, Amelio said.

The IBM PC unit was a premium, high-cost manufacturer, but Lenovo has been pushing to bring expenses in line with more efficient rivals such as Dell. Lenovo has moved U.S.-based engineering jobs to China and made other cuts.

[Brad]

Glad to see they are making a profit.

Whenever I have called I always speak to someone in Atlanta Georgia. I remember long ago speaking to people from Ireland and other far away places.

I hope it stays that way but I am sure it will not.

Brad

[pellicle]

I think that its certainly helped them that IBM did all the R&D and they just move the whole show to China. That in itself has to keep costs down.

To understand Chinese business models the documentary "China in the red" is worth a view

[BillMorrow]

I think that its certainly helped them that IBM did all the R&D and they just move the whole show to China. That in itself has to keep costs down.

To understand Chinese business models the documentary "China in the red" is worth a view

thanks for pointing this out..

and it seems China in the red is available onlne from PBS..!

http://www.pbs.org/wgbh/pages/frontline/shows/red/view/

FWIW, and before watching China in the red the chinese have a real problem with 1.5 billion population..
with india almost on a par with china in population, what will we (the USA) be able to do to maintain our standard of living..?!
its a tough question with no good answers i fear..

everyone talks about oil running out along with water and so forth..
what I see is overpopulation coming to haunt us..

add south america into this brew and i wonder why ANYONE sane would want to run for president..

/end soapbox rant/

[spasticteapot]

Well, they've killed off the "If you don't like it, send it back" policy.

I also expect to see tech support moved to China.

Lenovo is more or less the Chinese version of Dell - they make reasonably priced PCs.

[carbon_unit]

Well, they've killed off the "If you don't like it, send it back" policy.

That is a result of "Cherry Picking". Where people order 3 of the same model, pick the one with the best display (no dead or stuck pixels), then send the other two back (probably opened).
You can thank the fanatics for that one. Abuse any policy and it will change.