Lenovo Group, the world’s largest PC maker, announced a significant decline in net profit for the first quarter. The company’s profits fell by 66% compared to the same period last year, reaching $177 million.
The decrease in profit can be attributed to the struggling intelligent devices and infrastructure solutions businesses. Lenovo’s main products, including PCs, smartphones, and other devices, saw a slump of 28% in sales, contributing to a 24% decline in overall revenue, which reached $12.90 billion.
The company explained that the decline in sales was primarily due to the industry-wide challenge of clearing inventories. However, it emphasized that its efforts to reduce excess channel inventory have set the groundwork for future sales growth.
Furthermore, Lenovo’s infrastructure-solutions segment also faced a decline of 8%, amounting to $1.91 billion. The company attributed this decrease to soft demand in servers and the slower-than-expected transition to the next-generation platform within the industry.
Lenovo’s China revenue suffered a significant drop of 29% compared to the previous year, mainly driven by lower demand in the PC and infrastructure sectors.
Despite these challenges, Lenovo remains optimistic about its future prospects. The company stated that its PC business is stabilizing and is well-positioned for a recovery later this year. In addition, Lenovo plans to focus on investments in non-PC areas such as accessories and work-collaboration solutions. It sees promising opportunities in AI-related applications and intends to leverage its expertise in smart devices to provide more intelligent experiences.
Overall, despite the current setback, Lenovo is confident in its ability to adapt and thrive in a changing market landscape.