Lenovo Jukui Quest: Overseas root road distress adverse effects of IBM PC

Recently, Lenovo announced the fourth quarter ended March 31, 2006 and full year results. Lenovo reported a fourth quarter consolidated turnover of HK $24 billion 400 million, representing an increase of 417% over the same period last year, but this quarter Lenovo income tax and restructuring costs before the loss of HK $317 million Hong Kong dollars, including restructuring costs fourth quarter net loss of HK $903 million.

Lenovo believes that the loss is due to the impact of normal seasonal factors of business earnings and the introduction of new products and the introduction of the world's Lenovo brand investment.

Part of the overseas analysts believe that the final figure is far less than expected, the decline in earnings, because Lenovo's fourth quarter layoffs occurred in a one-time restructuring costs of $1000. Some analysts believe that Lenovo's acquisition of IBM PC sector late than expected in the industry, the cost of the acquisition may be too high. Analysts also believe that the recombinant IBM PC department, although the Lenovo brand image to spend huge sums of money in overseas, but the present situation of Lenovo in the overseas brand awareness is still low, the original IBM PC in the overseas market by HP and DELL and other companies share.

It is reported that in March of this year, Lenovo announced a global adjustment plan, 6 to 12 months in the Americas, Asia Pacific and Europe layoffs of $1000 and cut spending. As a result of the program, Lenovo in the fourth quarter of fiscal year, a related restructuring costs amounted to HK $543 million ($70 million). This is an important direct cause of Lenovo's fourth quarter loss of HK $900 million.

From the regional market profitability, Lenovo continued to maintain the advantage in Asia, but in overseas markets, Lenovo is not ideal performance. Reported in Greater China, Lenovo PC sales rose 31% in the fourth quarter, higher than the market growth, consolidated turnover of HK $8 billion 400 million, accounting for the group's total turnover of $35%. But in the Americas, Europe, the Middle East and Africa, Lenovo PC operating losses of 252 million and HK $87 million.

Analysts believe that Lenovo's performance in overseas markets is not ideal, one of the reasons is due to Lenovo's acquisition of IBM PC business, inherited the original adverse effects of the IBM PC business. It is reported that, prior to the acquisition by Lenovo, IBM PC business losses of up to $200 million per year.

Not long ago, the United States Department of state on the safety of Lenovo's computer is more reminiscent of Lenovo's overseas road worse.

Many analysts are not surprised by the current plight of Lenovo, which is an inevitable phenomenon. Lenovo Group is still pleased that Lenovo's business in Asia continues to grow rapidly. Lenovo can successfully solve the problem of restructuring and restructuring brought about by a series of problems in the overseas market is crucial to gain a firm foothold.