Lenovo sees slowing growth amid PC downturn

The Lenovo Group, China's leading PC manufacturer, Thursday reported a slowing growth in revenue during the fiscal first quarter ended June 30, amid a worldwide downturn in the PC market.

The company's revenue increased 10 percent year-on-year to $8.8 billion for the first quarter, far less than the 30 percent growth over the same period of 2012, according to a financial report posted on the Hong Kong Stock Exchange Thursday.

And the growth rate of its net profit also fell to 23 percent year-on-year from 35 percent over the same period in 2012.

Lenovo is suffering from an industry-wide downturn due to product transition, Liu Dalong, an industry analyst with Beijing-based market research firm iResearch, told the Global Times Thursday.

"We are seeing the PC market reduction directly tied to the shrinking installed base of PCs," Mikako Kitagawa, principal analyst at US IT research firm Gartner Inc, said in a July report, suggesting that more and more consumers worldwide are turning to inexpensive tablets and no longer consider PCs as devices that need regular replacement.

Data from Gartner indicated that in the ­second quarter, global PC shipments dropped 10.9 percent year-on-year to 76 million units, marking the fifth consecutive quarter of decline in the PC market. In its June report, Gartner forecast a 10.6 percent decline in 2013 from 2012 in worldwide PC shipments, while tablet shipments this year are expected to rise 68 percent year-on-year.

In response to this, many traditional PC vendors are undergoing a business transformation. Firms that mainly relied on PC sales are now offering IT services as HP and Dell do or producing mobile devices as Lenovo does, Ji Chendong, a senior IT consultant at KPMG China, told the Global Times Thursday.