Lenovo posts first quarterly loss since 2015
A shortage of memory chips and other key components reduced margins and increased costs at Chinese personal computer manufacturer Lenovo, leading it to post its first quarterly loss in nearly two years on Friday.
"Most of the component cost is stabilizing except memory," Lenovo chief operating officer Gianfranco Lanci said on an earnings call. He also indicated that prices would likely continue to rise, "at least until the end of the year."
Lenovo, which had recently been dethroned as the global leader in PC manufacturing by rival HP, lost $72m in the second quarter, in stark contrast to the $173m it earned over the same period last year.
Analysts had predicted a profit of $5.29m.
As more and more consumers move to mobile devices, PC makers, in general, have suffered with Lenovo reporting a 6% drop in its PC shipments for the quarter, twice that of the industry average 3%.
Losses from its mobile business, relating to the 2015 acquisition of Motorola, decreased as revenue rose 2% to $1.75bn over the same time frame, the only unit to post a rise in revenue.
Total revenue was flat at $10bn.
Lenovo chairman and chief executive, Yang Yuanqing said the group would be ditching low-margin deals and focussing more on tailored gaming PCs in the future.
Despite an 11% decline in revenue, Yang believed the group would turn profitable again within the next two years.
As of 1100 BST, shares had fallen 3.39% to HKG 4.56.