Lenovo admits Motorola product transition 'was not successful'

Lenovo, a Chinese company, purchased Motorola Mobility from Google in 2014 in a deal worth almost $3 billion.

Lenovo today said its ongoing restructuring including job cut delivered $690 million in second half of the year, preserving profit in Q4 2016.

Reporting its fourth quarter results, Lenovo said that revenue was $9.1 billion, down 19 percent year-over-year.

Fourth quarter net income was up 80 per cent year-over-year to US$180 million, while full year net loss was US$128 million, even after US$330 million in non-cash M&A related accounting charges.

Lenovo is a top player in the PC world, but the smartphone market has become a tougher nut to crack. The Beijing-based company said its shipments to markets outside China increased 63 percent to 51 million smartphones a year ago.

Huge acquisition and restructuring costs as well as weak sales for its smartphones business led China's Lenovo to post its first loss in six years. One aspect of its refreshed strategy is to have two co-presidents, with two distinct strategies for China and the rest of the world. Lenovo shipped 12.1 million PCs in the quarter, enough to bring in $6.2 billion, which is down 20 percent year-over-year.

Capturing large market shares in China and North America is key for Lenovo to successfully diversify its business and expand as a global mobile maker.

Lenovo generated $6.2 billion revenue from the PC Group. Asia Pacific had strong Q4 smartphone shipment growth, up 44 percent year-over-year driven by ASEAN.

Quarterly revenue for Lenovo's enterprise business group, which includes servers and storage devices, fell 8 percent. EMEA accounted for 27 percent of Lenovo's worldwide revenue.

Lenovo's shares are down 37% since the start of the year.

Analysts said cost-cutting was not enough to mask the impact of smartphone sales that were lower than forecast.

The Wall Street Journal said that Lenovo has struggled to hold ground against Chinese smartphone rivals such as Huawei Technologies, Alcatel and Oppo Electronics, which gained market share in the first calendar quarter, while Lenovo fell out of the top-five rankings, according to market-research firm Gartner.

Source: Lenovo admits Motorola product transition 'was not successful'