Center
Lenovo tipped to post second straight loss
By Alison Leung (China Daily)
Updated: 2006-08-02 09:15
 |
Large Medium Small |
Despite what's expected to be another less-than-stellar quarter, Lenovo has been having some success carving out a global footprint.
Its global market share in the year's second calendar quarter equivalent to Lenovo's fiscal first climbed to 7.7 per cent from 6.4 per cent in the first quarter and 7.5 per cent a year ago, according to consultancy IDC.
Still, analysts reckoned that that market share gain could have come at the expense of profit margins. The firm which has stated publicly that profits are not a prime concern for now faces persistent pricing pressure.
Over the past year, it had tried to arrest a slide in market share to larger rivals Dell and HP.
In July, Dell warned that earnings in its fiscal second-quarter beginning in May would fall about 30 per cent short of forecasts, blaming what it called "aggressive pricing" in a slowing market, though some analysts said the problems were largely company specific.
Lenovo Chairman Yang Yuanqing told Reuters in May that the firm would focus on expanding market share and was ready to cut prices to keep up.
"Lenovo is an interesting story and we are positively biased, but to see results will require patience," said Credit Suisse analyst Venugopal Garre, in a research report issued on Monday.
Lenovo's shares fell 13 per cent from April to June, underperforming a 3 per cent gain on the benchmark Hang Seng Index during the same period. The stock was up 0.8 per cent at HK$2.52 at midday yesterday.
Lenovo hopes to transform itself into a notebook powerhouse by combining its expertise in lower-end PCs with the strength in laptops it bought along with Big Blue's PC assets.
Notebooks accounted for just under 50 per cent of group sales last year but that ratio would increase this year, Yang said in May.