Lenovo's profit exceeds estimates, sees growth as more people work from home

Stock Photo: An employee gestures next to a Lenovo logo at Lenovo Tech World in Beijing, China, November 15, 2019. REUTERS / Jason Lee

HONG KONG (Reuters) – Lenovo Group, the world's largest maker of personal computers, recorded a sharp drop in fourth-quarter profit due to interruptions caused by the coronavirus crisis, although the result was much better than expected.

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Lenovo President Yang Yuanqing told Reuters that production was back on track and expects to see revenue growth year on year this quarter for the PC and smart device and data center businesses as more people work in home permanently.

He said in a separate statement that the company estimates that in two to three years the total addressable market for PCs across the industry may have increased by 25% to 30%.

Net income fell 64% in January-March to $ 43 million, but was ahead of Refinitiv's consensus estimate of $ 7.5 million. Revenue fell 9.7% to $ 10.6 billion.

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The higher-than-expected results raised Lenovo's shares, which rose 5% in Wednesday afternoon's trading.

Lenovo had to close factories, including a large factory in Wuhan, the epicenter of China's outbreak, due to measures to contain the virus. At times, the company needed, in extreme cases, to share employees with other companies and send employees to work on the assembly lines when production workers were quarantined.

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"We have resumed 100% of production in China," Yang told Reuters, although he noted that some components are still missing.

Worldwide shipments of personal computers fell 12.3% in the first quarter of 2020, the sharpest drop since 2013 due to the pandemic, research firm Gartner reported last month.

Lenovo achieved a 24.4% share of the PC market during the quarter, ahead of rivals HP and Dell, which held 21.5% and 19.7%, respectively, said Gartner.

Reporting by Pei Li; Editing by Edwina Gibbs

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