Levono Profits up 6%

[admsteiner]

The AP is reporting (I don't have a publicly available link) that Levono's 1Q profits are up 6%. More importantly...
"Chief Executive Steve Ward said the International Business Machines unit the company bought for $1.75 billion in late April - which made Lenovo the world's third-largest PC maker - was now profitable. Before Lenovo purchased it, IBM's PC business had lost money from 2001 through at least the first half of 2004. "

--Adam

[eigh]

odd, i guess the change over seems like a good thing so far.

[BillMorrow]

what i find ODD is how lenovo can turn the PCD around in such a short time period..

very odd..

how can lenovo turn $150m LOSS into a 6% profit..

i am thinking i want to hire lenovo to manage the US government..

[K. Eng]

Probably because the IBM PCD managers who moved to Lenovo are pretty much free to do whatever they want now that they are in charge.

what i find ODD is how lenovo can turn the PCD around in such a short time period..

very odd..

how can lenovo turn $150m LOSS into a 6% profit..

i am thinking i want to hire lenovo to manage the US government..

[admsteiner]

It is interesting. But I'm interested in the next quarter for the following reason:

The sale was a big deal, it gained lots of publicity. Included in that was the fact that the Thinkpad is a great model. Just think of all the fears that were running amok, both on the web and in print, about the TP being discontinued.
I assume that generated publicity which piqued the interest of buyers, some may have said "let's get it now while we still can."

Levono might have advertised more this quarter than they will in the future, precisely to get their name associated with the Think line. Alleviate fears, let people know things are staying the same, etc.

By showing a profit this quarter, Levono managed to solidfy the acquisition, showing the line was salvageable. Note that while their profits are up 6% and the unit is profitable, we don't know how much of that 6% is from the IBM unit they purchased. It might be barely profitable. We just don't know. We also don't know any accounting gimmicks that may have been used, perhaps suppliers were moved around, etc.

Regardless, I think this is a positive indicator. Levono is a hardware company, IBM has become more service oriented and thus more fractured (at least by the idea of doing one thing well as opposed to many things adequately). Between this and the blade server reselling contract they got...things are looking up.

--Adam
PS: Sorry for the semi-disjointed rant, I don't feel like retyping it now