Lenovo admits its Motorola business has not met expectations even as net profit rises by 80%

(Image credit: Indiatimes)

Lenovo announced its fourth fiscal quarter and full year results today and it looks like the company’s fell down 19 percent year-on-year to USD 9.1 billion while annual revenue fell down 3 percent year-on-year to USD 44.9 billion, as the company suffered from the slowdown in the PC Market and the falling mobile phone sales. This is its first loss in six years.

Thankfully for Lenovo, its ongoing restructuring (that the company says is the largest restructuring in Lenovo history) that included job cuts delivered savings of $690 million in the second half of the year, preserving their net profit in Q4 2016. Its fourth quarter net income was up 80 percent year-over-year to US$180 million.

Thus, Lenovo managed to strengthen its core PC business, enhanced cost structure and protected its profit, despite facing internal and external challenges that impacted revenue.

“Facing the operational issues in the businesses, we have already taken a number of proactive actions, including making key decisions in organization, leadership, products and channels to get back to growth in mobile, and adopting a new multi-business operating system,” said Yang Yuanqing, chairman and CEO of Lenovo in a statement.


(Image credit: Bloomberg)

However, not all was well with its Motorola business. The company admitted that it has indeed failed to build on its acquisition of Motorola.

In late 2014, Lenovo had acquired the phone-maker from Google for $ 2.91 billion and in its end of the year earnings report published today; it claimed that the post-deal performance did not meet expectations.

The company shipped 10.9 million devices in the final quarter and 66.1 million smartphones over the full year. Lenovo said that the Motorola devices contributed just five million to that quarterly tally, which was below its target.

“These results show integration efforts did not meet expectations. In particular, China shipments declined 85% as the business shifted focus to open market and higher price bands and product transition in North America was not successful,” said Lenovo.