Lenovo Reports Second Quarter 2007/08 Results





    --  Quarterly revenue jumps 20% to US$4.4 billion

    --  Quarterly EBITDA (excluding restructuring) of US$210 million, up 135%

    --  Quarterly pre-tax income (excluding restructuring) of US$125 million,
up 177%

    --  Quarterly profit attributable to shareholders (including impact of
restructuring) of US$105 million, up 178%

    --  Quarterly basic EPS of 1.22 US cents, or 9.47 HK cents, up 177%

    --  Net cash reserves of US$1.7 billion (as of September 30, 2007)

    HONG KONG, November 1 /CNW/ - Lenovo Group today reported results for its
second fiscal quarter of 2007/08 ended Sept. 30, 2007. Consolidated revenue
for the quarter jumped 20%, year over year, to US$4.4 billion, driven by
growth in all of Lenovo's operating geographies. For the third consecutive
quarter, Lenovo PC shipments exceeded the average growth rate of the global PC
market, with year-over-year growth of 23% far outpacing the industry's average
growth rate of 15.7%.

    The company's gross profit margin for the second quarter of 2007/08 was
15.1%, compared to 13.0% in the same period a year ago, and up 0.2 percentage
points sequentially. Net cash reserves as of Sept. 30, 2007, totaled US$1.7
billion. Lenovo's Board of Directors has declared an interim dividend of 3.0
HK cents or 0.39 US cents per share.

    "Our strong performance in the second quarter once again proved that
Lenovo has successfully completed the integration phase of our acquisition,
and we are now entering a new phase of profitable growth," said Lenovo
Chairman Yang Yuanqing. "In this new phase, we will continue to strengthen the
competitiveness of our products and improve operational efficiency, so as to
further enhance profitability. We will also continue to tap the growth
potential of the PC industry, especially in China and other emerging markets,
the SMB and consumer segments in mature countries, and the notebook market
worldwide. Our work in all of these market segments is now in full swing."

    William J. Amelio, Lenovo's president and chief executive officer, said,
"Our second quarter performance demonstrates that our business strategy
continues on track, and that we're executing effectively around the world. We
achieved market share gains in both desktop and notebook PCs, and all of our
geographies posted double-digit revenue increases. Through growing market
acceptance, customers clearly are recognizing the value we deliver through our
best-engineered PCs and unequalled ownership experience.

    "By making substantial progress on all of our critical priorities over
the past few quarters, we're now a stronger, healthier company," Amelio added.
"One important sign of this progress is our decision to completely transition
our Think products from the IBM brand to the Lenovo brand two years earlier
than planned. Concurrently, we've recently launched our own 'Best Engineered
PCs' advertising campaign and global sponsorship of the Beijing 2008 Summer
Olympic Games to promote our brand worldwide."

    GEOGRAPHIC OVERVIEW

    --  Lenovo Greater China posted US$1.8 billion in consolidated revenue in
the second quarter, up 26.5% year to year, as the Company's growth in PC
shipments outpaced the industry average for the Greater China market. China
business accounted for 41% of total revenue in the quarter.

    --  The Americas accounted for US$1.2 billion in consolidated revenue, or
27% of total revenue. The continued rollout of the transaction model
contributed to success in the region which experienced double-digit volume and
revenue growth year over year. Lenovo PC shipments in the Americas during the
quarter increased 12%.

    --  In the Europe, Middle East and Africa region (EMEA), shipments
increased 16% in the second fiscal quarter. For the same period, consolidated
revenue totaled US$885 million, or 20% of total revenue.

    --  Shipments for the Asia Pacific business (excluding Greater China)
increased 24% in the second fiscal quarter. Consolidated revenue in Asia
Pacific totaled US$539 million in the second quarter, or 12% of total revenue.

    PRODUCT OVERVIEW

    --  Lenovo's Notebook computers continued to be the largest contributor
to total revenue, providing a commensurate percentage increase to company
profit. Notebook shipments in the second fiscal quarter were up 42% year over
year, and consolidated revenue was US$2.5 billion, or 56% of total revenue for
the quarter.

    --  In the second fiscal quarter, Lenovo's Desktop shipments rose 12%
year over year posting strong volume and revenue share gains. Consolidated
revenue was US$1.8 billion in the quarter, or 40% of total revenue.

    --  Shipments of Lenovo's Mobile Handsets, conducted primarily in China,
showed a decrease of 17% in the second fiscal quarter. Handset shipments
generated consolidated revenue of US$122 million, or 3% of total revenue,
continuing the trend of this business representing a smaller percentage of
total company revenues sequentially and year over year.

    2007/08 INTERIM RESULTS

    For the six months ended September 30, 2007, consolidated revenue
increased 16 percent year over year to US$8.4 billion. During the first half
of the fiscal year, Lenovo's PC shipments grew approximately 23% year over
year. In the same period, pre-tax income (excluding restructuring charges
taken during the six-month period) totaled US$247 million. Lenovo reported
profit attributable to shareholders of US$172 million and basic earnings per
share for the interim 2007/08 period of 2.00 US cents, or 15.52 HK cents.

    ABOUT LENOVO

    Lenovo (HKSE: 992) (ADR: LNVGY) develops, manufactures and markets
high-quality, secure and easy-to-use technology products and services
worldwide and is dedicated to building the world's best-engineered personal
computers. Formed by Lenovo Group's acquisition of the former IBM Personal
Computing Division, Lenovo's heritage in both emerging and developed markets
has resulted in a New World Company business model where ideas, operations and
resources are borderless and mobile. With four operational hubs in Beijing,
Raleigh, Singapore and Paris, Lenovo has major research centers in Yamato,
Japan; Beijing, Shanghai and Shenzhen, China; and Raleigh, North Carolina, as
well as a marketing center in Bangalore, India. For more information, see
www.lenovo.com

    
                                 LENOVO GROUP
                              FINANCIAL SUMMARY
        For the fiscal quarter and half-year ended September 30, 2007

                   (in US$ millions, except per share data)

                                                 Y/Y                Y/Y
                                  Q2      Q2      %        1H        %
                                07/08   06/07    CHG     07/08      CHG
    --------------------------- ----------------------  ------------------
    Turnover                    $4,432  $3,700     20%    $8,358       16%
    --------------------------- ----------------------  ------------------
    Gross Profit                   668     480     39%     1,252       28%
    --------------------------- ----------------------  ------------------
    Gross Profit Margin          15.1%   13.0%  2.1pts     15.0%    1.4pts
    --------------------------- ----------------------  ------------------
    Operating Expenses           (548)   (434)     19%   (1,009)       13%
    --------------------------- ----------------------  ------------------
    Operating Expense Margin     12.4%   11.7%  0.7pts     12.1%  (0.3pts)
    --------------------------- ----------------------  ------------------
    Other Income / (Expenses)(*)       5     (1)     N/A         3       N/A
    --------------------------- ----------------------  ------------------
    Pre-Tax Income before
     restructuring cost            125      45    177%       247      212%
    --------------------------- ----------------------  ------------------
    Restructuring Costs            (2)     (2)     N/A      (47)      118%
    --------------------------- ----------------------  ------------------
    Pre-Tax Income                 123      43    186%       201      247%
    --------------------------- ----------------------  ------------------
    Profit Attributable to
     Shareholders                  105      38    178%       172      299%
    --------------------------- ----------------------  ------------------
    EPS (US cents)
                                ----------------------  ------------------
    Basic                         1.22    0.44    177%      2.00      300%
                                ----------------------  ------------------
    Diluted                       1.12    0.43    160%      1.86      280%
    --------------------------- ----------------------  ------------------
    EBITDA(xx)                       210      89    135%       391      130%
    --------------------------- ----------------------  ------------------

    (*) Including finance income, finance cost and share of profits/(losses)
     of associated companies

    (xx) Excluding restructuring charges
    




For further information:

For further information: Lenovo Group Hong Kong Angela Lee, (852)
2516-4810 angelalee@lenovo.com or Beijing Jay Chen, (8610) 5886-2552
chenji@lenovo.com or U.S. Ray Gorman, (919) 257-6325 rgorman@us.lenovo.com

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