Lenovo Revenues Plunge 24% In Q4 Amid Demand Sluggishness In PC Market

Lenovo Group Ltd.LNVGY reported a fourth-quarter revenue dip of 24% year-on-year to $12.6 billion.
Given pressures from the PC market and the global economy, 4Q marked Lenovo's "most challenging quarter" of the year.
Weakness in Intelligent Devices Group (IDG) weighed on quarterly performance. However, momentum from the growth engines of Solutions and Services Group (SSG) and Infrastructure Solutions Group (ISG) helped offset the device market softness.
Revenue from IDG declined 33% Y/Y. SSG revenue was up 18% Y/Y to $1.6 billion, and ISG revenue was up 56% to $2.2 billion.
Non-PC revenue mix during the quarter reached a "historic high" of 43%, up 12 points year-to-year.
For the full year, Lenovo registered revenues of $61.95 billion, down 14% Y/Y.
"By the end of this quarter or early next quarter, the inventory digestion will come to an end so that the activation number and the shipment number will be more consistent," Reuters reported citing a statement from Lenovo Chief Executive Officer Yang Yuanqing in an interview.
The report added that to improve profit margins, Lenovo has been expanding non-PC businesses, such as smartphones, servers, and information technology (IT) services.
Outlook: The Group expects the entire PC and smart devices market to resume year-to-year growth in the second half of 2023.
The IT services market will resume relatively high growth.
In the mid-to-long term, the digital and intelligent transformation will continue accelerating, leading to an enormous growth potential for cloud and computing infrastructure.
Price Action: LNVGY shares closed lower by 2.46% at $19.78 on Tuesday.

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