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Lenovo Sees Indicators of Restoration throughout Expertise Sector – Delivers Quarter-on-Quarter Efficiency Enhancements and Additional Accelerates AI Management

16 November, 2023 – Lenovo Group Restricted (HKSE: 992) (ADR: LNVGY), along with its subsidiaries (‘the Group”), at the moment introduced second quarter outcomes reporting Group income of US$14.4 billion and web revenue of US$273 million on a non-Hong Kong Monetary Reporting Requirements (HKFRS)[1] foundation. Gross revenue margin improved year-on-year to 17.5%, a file excessive for a second quarter. The Group’s diversified progress engines continued to ship robust efficiency, with income from the non-PC companies accounted for 40% of Group income, up three factors year-on-year.

The Group is seeing clear indicators of restoration throughout the know-how sector, noting the robust execution of its technique, operational excellence, and steady funding in innovation as key contributors to its quarter-on-quarter efficiency enhancements. Trying forward, Lenovo will additional leverage the alternatives created by AI, the place it’s uniquely positioned to succeed given its hybrid AI mannequin, pocket-to-cloud portfolio, robust ecosystem and partnerships, and rising portfolio of AI applied sciences and capabilities. Its ongoing funding in innovation and specifically AI, will additional bolster Lenovo’s capability to seize the exponential progress from AI and drive sustainable progress and profitability for the enterprise. The Group is assured in its capability to renew year-on-year progress very quickly.

Monetary Highlights:

Lenovo’s Board of Administrators declared an interim dividend of 8.0 HK cents per share.

Chairman and CEO quote – Yuanqing Yang:

“Final quarter, regardless of macro challenges, we noticed clear indicators of restoration throughout the know-how sector. Due to our robust execution, operational excellence, and steady funding in innovation, we delivered consecutive quarter-on-quarter efficiency enhancements, indicating an encouraging trajectory to restoration. With steady execution of our clever transformation technique, and with our AI ecosystem and partnership additional strengthened, we are going to leverage our full-stack AI capabilities from pocket to cloud to allow hybrid AI purposes for each enterprise and each particular person, in the end driving sustainable progress for our enterprise.”

Accelerating AI management

AI just isn’t new for Lenovo and has lengthy been a spotlight of its digital and clever transformation technique. The corporate outlined its imaginative and prescient of ‘AI for All’ at its annual Tech World innovation occasion in October, focusing specifically on its mannequin for hybrid AI the place public, non-public, and private basis fashions co-exist as a way to allow AI for All, whereas respecting safety and privateness. Lenovo’s imaginative and prescient included a wealthy good machine portfolio together with AI-enabled PCs, smartphones, and tablets, in addition to AI-ready and AI-optimized infrastructure, options, and providers. Lenovo is uniquely positioned to seize the exponential progress from AI given its pocket-to-cloud portfolio, robust eco-system and partnerships (together with an growth of the firm’s partnership with NVIDIA), and rising portfolio of AI applied sciences and capabilities.

Lenovo Chairman and CEO Yuanqing Yang was joined on stage at Tech World by leaders from Lenovo’s world companions, together with NVIDIA Founder, President and CEO, Jensen Huang; AMD Chair and CEO, Dr. Lisa Su, and Components 1® President and CEO, Stefano Domenicali. Microsoft Chairman and CEO, Satya Nadella, Qualcomm CEO and President, Cristiano Amon, and Intel CEO, Pat Gelsinger joined Tech World by way of video hyperlink.

As introduced final quarter, Lenovo is committing an additional US$1 billion in funding for AI-driven innovation that won’t solely guarantee it might probably notice its imaginative and prescient for ‘AI for All’, however that it might probably drive sustainable progress for the whole enterprise.

Options and Companies Group (SSG): Document income and working revenue, accumulating AI options and providers

Q2 FY23/24 efficiency:

  • SSG broke data within the second quarter for each income and revenue, with income of US$1.9 billion and an working margin of 20%.
  • Assist providers and software program had been the core revenue engine for the SSG group.
  • Managed providers and undertaking and options providers additional expanded within the second quarter, collectively now making up 56% of SSG’s income, up three factors year-on-year.

Alternatives and Sustainable Progress:

  • SSG has robust momentum for its hero choices, together with Digital Workplaces Options (DWS), Hybrid Cloud, and sustainability options and providers.
  • SSG targeted its hero choices to assist particular vertical industries with good options and providers, successful breakthrough buyer offers in a number of markets.
  • Lenovo’s new hybrid AI Skilled Companies Observe can also be enabling enterprises to make use of Hybrid infrastructure and AI to remodel their enterprise.

Infrastructure Options Group (ISG): Tackling market headwinds, constructing hybrid AI infrastructure

Q2 FY23/24 efficiency:

  • ISG’s income declined year-on-year to US$2 billion, an inevitable influence of wider macro-economic {industry} headwinds, financial slowdown, and platform migration.
  • ISG delivered robust efficiency in storage, software program and providers, and drove Excessive Efficiency Computing (HPC) and Edge progress.
  • The storage enterprise reached an all-time income file, making Lenovo the third largest storage supplier on the planet.

Alternatives and Sustainable Progress:

  • As hybrid AI develops additional it would drive the long run progress and diversification of the worldwide ICT infrastructure market which Lenovo is effectively positioned to handle given its wealthy portfolio of infrastructure merchandise and options.
  • ISG will proceed to strengthen its portfolio competitiveness, in addition to operational excellence and is assured to renew progress and profitability as quickly as doable.

Clever Gadgets Group (IDG): Solidifying market management, capturing AI machine alternatives

Q2 FY23/24 efficiency:

  • IDG maintained its world No.1 place within the second quarter for each PC shipments and activations, regardless of market challenges.
  • Income declined year-on-year to US$11.5 billion, however profitability resilience was maintained with an industry-leading working margin of seven.4%.
  • The smartphone enterprise achieved double-digit premium to market cargo progress year-on-year, though general the market was flat. The enterprise enhanced its general competitiveness of merchandise and optimized its portfolio with the next mixture of premium merchandise, with a file excessive mixture of premium merchandise pushed by gross sales of razr.

Alternatives and Sustainable Progress:

  • Trying forward, IDG will absolutely leverage generative AI to speed up the launch of subsequent technology AI units, together with the launch of an AI PC subsequent yr.
  • Lenovo will additional put money into know-how innovation for progress and long-term competitiveness.

ESG highlights

Lenovo has been acknowledged for a number of ESG achievements over the previous quarter, together with:

  • Being included within the 2023 Hold Seng Company Sustainability Index, the place it achieved the strongest rating within the IT {industry} for environmental and social achievements.
  • The Group was additionally awarded ‘Champion’ standing within the Canalys World Sustainability Ecosystems Management matrix.
  • The Group was named as an EPEAT Local weather Champion, with greater than 400 merchandise registered as a part of the primary EPEAT Local weather+ designated merchandise itemizing. EPEAT is the premier world ecolabel for electronics and know-how merchandise.
  • In September Lenovo joined the UN World Compact Ahead Sooner initiative to speed up non-public sector motion for the UN’s 17 Sustainable Growth Objectives as a way to meet the 2030 agenda.

[1] non-HKFRS measure was adjusted by excluding web honest worth adjustments on monetary property at honest worth by revenue or loss, amortization of intangible property ensuing from mergers and acquisitions, mergers and acquisitions associated expenses; and the corresponding revenue tax results, if any.

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