Collected colin giles: bright earnings cannot hide lenovo future concerns

author: yong-jie sun

recently, lenovo group released the 2013/14 fiscal year earnings report and in the fourth quarter (hereinafter referred to as the Q4) results from throughout the year, lenovo group 2013/14 fiscal revenue of $38.7 billion, up 14% from a year earlier. Pre-tax profits of more than $1 billion, $1.014 billion, up 27%; Net profit rose 29% to $817 million. As for Q4, its quarterly revenue of $9.4 billion, up 19%; Pre-tax profits of $212 million, up 28%; Net income was $158 million, up 24% from a year earlier. Can say, both in terms of the year and the latest quarter, lenovo’s earnings to beautiful to describe a little bit too much.

as luck would have it, is on the second day after lenovo earnings release, lenovo announced the original nokia China join lenovo group CEO colin giles, served as vice President of lenovo group. Colin giles will be in charge of lenovo in addition to the global mobile phone sales and business development outside of China, and deeply involved in lenovo acquisition project of MOTOROLA mobility, report to lenovo mobile business group President who.

given colin giles before joining lenovo is as executive vice President of huawei mobile phone consumer business, global marketing, retail and open market operations, and the term is less than a year, the industry seems to have turned to the focal point of huawei’s corporate culture can retain talent, especially the problem of foreign talent, and here we will focus on analysis, lenovo why after a brilliant results can’t wait to introduce colin giles lenovo? Behind this show?

core PC Ann in dangerous opponent restorative growth

don’t deny that lenovo in the past year in the latest quarter, lenovo in revenue and profits are achieved good growth. But look from its latest quarter, notebook and desktop PC is still in traditional PC industry accounted for 80% of its revenue, extrapolate, even from the Angle of the year, PC lenovo the proportion of revenue and profit will not less than 80%. But the fact is known to all, the traditional PC business continued weakness. In this industry will be speculation, perhaps we will think this lenovo’s greatest concern is to rely too much on traditional PC business, and decline in the traditional business is a sunset industry.

this is just one of them. Looked from the past quarter, in fact, the decline in the PC industry there have been signs of bottoming out, but also because of the bottom, before we see in the PC market lenovo “other vendors are down I alone up” the situation has been broken. In the last quarter, for example, the top five manufacturers, in addition to acer, before the other has been in decline in HP, dell, asus, all shipments are growth. Industry, compared with HP, dell such vendors, lenovo PC profit margins is low, but by compared to the opponent’s rapid growth to maintain competitive advantage. And as HP, dell began to resume positive growth, lenovo PC business growth will increase the pressure of (because of low profit, need higher shipments), especially in overseas markets.

according to lenovo CEO Yang yuanqing, lenovo group in the last quarter, in Europe, the Middle East, Africa, the PC business achieved substantial growth, the region’s PC business revenue has catch up with China, but still lag behind in terms of profit contribution to China, less than half of China. From Mr Yang’s interpretation is not hard to find, in addition to the Chinese market, lenovo PC market abroad far less profitable in the Chinese market. Further said that is why Mr Yang, lenovo PC market to overseas to the main reason for the profit harvest (is actually to change the lenovo PC market lower profits abroad, even not the status quo of money). But followed, increase profits will affect for overseas market share? After all, HP, dell, asus to start recovery growth.

domestic mobile market first to enter but miss growth window

if as lenovo’s core, including PC + strategic foundation of restorative growth in the PC business with rival lenovo to keep face growing shipments and must take into account future profits is how to balance concerns, tablet and smartphone market in the mobile Internet market, lenovo is also pressure is quite big.

lenovo’s latest results show that the fourth quarter, tablet sales rose 2.2 times, 2.1 million; Smartphone sales to 12.9 million units, up 62.9% from a year earlier. Alone, lenovo in the PC + is an important part of the tablet and smartphone growth not slow, but even so, as the earliest when lenovo stronghold of China to the tablet market, according to analysys, a think-tank, lenovo’s latest market share is only 6.12%, while the third, but lags far behind the first 57.11% of the apple and the top ranked the second of samsung’s 11.11%.

smartphones also is give priority to in order to the Chinese Market, based on the Counterpoint Technology Market Research data released, lenovo in second place at 12%, but compared with millet and apple followed by China, only 1-2% more (millet in third at 11%, apple was fourth with 10%). Can say as the earliest tablet and smartphone market in China with the lenovo, so far, and failed to make a clear advantage. Crucially, this year China’s smartphone and tablet market growth will slow, and more competitive, the growth of the associations at the beginning of the miss time window, whether on the basis of the original but also accelerate growth is fraught with difficulty.

pathological motor company overseas markets Growth in pressure

therefore, Yang yuanqing is aware of this trend. This from its earnings conference for lenovo the challenge of the future for a period of time may be China’s smartphone shipments slowing sharply and lenovo tablet in the global market share of only 4%, also has the very big disparity distance has a 10% market share of target’s remarks was confirmed.

Mr Yang’s worry is not without reason. Smart phones, for example, 80 million shipments of the new fiscal year, lenovo group put forward the goal of bikes and the sum of lenovo mobile after (m&a). But shipments from the last quarter was only about 12.9 million units (only is lenovo their mobile phone), the task by the end of the year that is more than half, so the other task has fallen to MOTOROLA lesbian movement after the merger. But in the last quarter, MOTOROLA mobile only shipped 6.5 million smartphones, this is MOTOROLA mobility is considered to show signs of recovery in the past few quarters for the quarter.

so, lenovo’s future or overweight in the domestic market, or use of MOTOROLA mobile also overseas market. But the disadvantage is that with the recent China’s three big operators to reduce end subsidies, the shipments still predominantly operators association and PC, facing the balance between the sales and revenue. Lenovo only appear to be hope acquisition of MOTOROLA mobility. But the latest results show that MOTOROLA mobility loss to further expand, the net loss of $198 million, higher than the same period of last year’s $182 million. This means that lenovo on the overseas market development is also facing the challenge of sales and revenue balance. Little slip, is likely to be lost land sales and camp. But lenovo in addition to send to MOTOROLA seems to have no choice.

need to add that lenovo’s latest results showed that its smartphone sales last year of 50 million, 5.7 million overseas region, into the 26 countries. Thus, overseas market sales of smart phones account for only about 1/10 of its sales, and the average annual sales of less than 300000 in overseas markets, say, lenovo is nominally into overseas markets, but its little contribution to lenovo in the smartphone (or sales), as for the revenue and profit are negligible.

it seems so eager to lenovo would temminick colin giles income, the concern is the decisive factor of the existence of the future development. But colin giles can not be knocked down, lenovo will be a considerable challenge.