Lenovo Reports First Quarter 2007/08 Results





    --  Quarterly revenue of US$3.9 billion, up 13%

    --  Quarterly EBITDA (excluding restructuring) of US$182 million, up 125%

    --  Pre-tax income (excluding restructuring) of US$123 million, up 258%

    --  Profit attributable to shareholders (including restructuring) of
US$67 million

    --  Basic EPS of 0.78 US cents, or 6.10 HK cents, including restructuring
charges

    --  Net cash reserves of US$1.3 billion (as of June 30, 2007)

    HONG KONG, August 2 /CNW/ - Lenovo Group today reported strong results
for its first fiscal quarter of 2007/08, ended June 30, 2007. Consolidated
revenue for the quarter grew 13 percent, year over year, to US$3.9 billion,
driven by robust shipment growth in all geographies. Lenovo's worldwide PC
shipments grew more than 22 percent in the quarter, well ahead of the industry
average growth of approximately 13 percent.

    Lenovo's gross profit margin for the first quarter improved to 14.9
percent, compared to 14.3 percent in the same period a year ago, and down 30
basis points sequentially. Excluding restructuring charges taken in the first
quarter, pre-tax income increased 258 percent to US$123 million. Net cash
reserves as of June 30, 2007 totaled US$1.3 billion.

    In April 2007, Lenovo announced an action plan to strengthen its global
competitive position and increase operational efficiency worldwide. As a
result, Lenovo's reported results reflect a restructuring charge relating to
the plan of approximately US$45 million taken in the first fiscal quarter,
which ended June 30, 2007. Reflecting that restructuring charge, Lenovo
reported pre-tax income of US$78 million and basic earnings per share for the
first quarter of 2007/08 of 0.78 US cents, or 6.10 HK cents.

    "In the past two years, through the formulation of the right strategy and
effective execution, Lenovo's performance is showing signs of growth," said
Lenovo Chairman Yang Yuanqing. "We are seeing signs from the strategic
implementation of our integration plan that tell us the acquisition is on the
path to success. Building upon a solid, healthy foundation, Lenovo has the
ability to grow faster and tap the growth potential of the PC industry. We
will not only improve the competitiveness of our existing business, but also
actively expand the consumer business worldwide."

    "The steps we have taken for enhanced operational efficiency and expense
control positioned Lenovo to take advantage of a rising worldwide PC market
and deliver another solid quarter across all regions - with each geography
contributing to the Company's profitable growth," said William J. Amelio,
president and chief executive officer. "As Lenovo's market share growth and
execution of our core strategic initiatives continues to drive improved
performance, we remain focused on the fundamentals of a dynamic global market.
With the opening of a new marketing hub in India and new manufacturing/
fulfillment facilities in Mexico, India, China and the U.S., Lenovo continues
to invest in key markets around the world, further improve our supply chain,
and accelerate our ability to reach both existing and new regions and
segments."

    GEOGRAPHIC OVERVIEW

    --  Lenovo Greater China posted US$1.5 billion in consolidated revenue in
the first fiscal quarter, up 14 percent. The Company's growth in PC shipments
outpaced the industry average for the Greater China market, driven by growth
in both the Company's transaction and relationship business. Lenovo's Greater
China business accounted for 39 percent of total revenue in the quarter.

    --  The Americas accounted for US$1.1 billion in consolidated revenue, or
29 percent of total revenue. The rollout of the transaction business model in
the U.S. and Latin America continued to contribute to Lenovo's growing
momentum in the region, which experienced double-digit volume and revenue
growth year-over-year. Lenovo PC shipments in the Americas during the quarter
increased 15 percent.

    --  In the Europe, Middle East and Africa region (EMEA), shipments
increased 22 percent in the first fiscal quarter. For the same period,
consolidated revenue totaled US$755 million, or 19 percent of total revenue.
The rollout of the transaction sales model contributed to revenue gains, with
strong sales in Germany, France and the U.K. contributing to overall
performance.

    --  Shipments for the Asia Pacific business (excluding Greater China)
increased 12 percent in the first fiscal quarter. Consolidated revenue in Asia
Pacific totaled US$496 million in the first quarter, or 13 percent of total
revenue. Performance was driven by expanded transaction business in India and
ASEAN countries and the launch of Lenovo products into select consumer
markets.

    PRODUCT OVERVIEW

    --  Lenovo's Notebook computers continued to be the largest contributor
to total revenue, driven by sales in China and the launch of consumer products
in Asia. Notebook shipments in the first fiscal quarter were up 26 percent
year over year, and consolidated revenue was US$2.1 billion, or 53 percent of
total revenue for the quarter.

    --  In the first fiscal quarter, Lenovo's Desktop shipments rose 20
percent year over year posting double-digit volume and revenue gains.
Consolidated revenue was US$1.7 billion in the quarter, or 43 percent of total
revenue.

    --  Shipments of Lenovo's Mobile Handsets, conducted primarily in China,
increased 2 percent in the first fiscal quarter, with Lenovo holding the #4
position in that market. Handset shipments generated consolidated revenue of
US$113 million, or 3 percent of total revenue.

    ABOUT LENOVO

    Lenovo (HKSE: 992) (ADR: LNVGY) is dedicated to building the world's
best-engineered personal computers. Lenovo's business model is built on
innovation, operational efficiency and customer satisfaction, as well as a
focus on investment in emerging markets. Formed by Lenovo Group's acquisition
of the former IBM Personal Computing Division, the company develops,
manufactures, and markets reliable, high-quality, secure, and easy-to-use
technology products and services worldwide. Lenovo has major research centers
in Yamato, Japan; Beijing, Shanghai and Shenzhen, China; and Raleigh, North
Carolina. For more information, see www.lenovo.com.

    
                                 LENOVO GROUP
                              FINANCIAL SUMMARY
                  For the fiscal quarter ended June 30, 2007

                   (in $US millions, except per share data)

                                                                   Y/Y
                                              Q1         Q1         %
                                             07/08      06/07      CHG
    ------------------------------------- ---------- ---------- ----------
    Turnover                                  $3,926     $3,476        13%
    ------------------------------------- ---------- ---------- ----------
    Gross Profit                                 585        497        18%
    ------------------------------------- ---------- ---------- ----------
    Gross Profit Margin                        14.9%      14.3%    0.6 pts
    ------------------------------------- ---------- ---------- ----------
    Operating Expenses                         (462)      (465)       (1%)
    ------------------------------------- ---------- ---------- ----------
    Operating Expense Margin                   11.8%      13.4%  (1.6 pts)
    ------------------------------------- ---------- ---------- ----------
    Other Income(*)                                  0          2        N/A
    ------------------------------------- ---------- ---------- ----------
    Pre-Tax Income before restructuring
     cost                                        123         34       258%
    ------------------------------------- ---------- ---------- ----------
    Restructuring Costs                         (45)       (19)       131%
    ------------------------------------- ---------- ---------- ----------
    Pre-Tax Income                                78         15       425%
    ------------------------------------- ---------- ---------- ----------
    Profit Attributable to Shareholders           67          5      1184%
    ------------------------------------- ---------- ---------- ----------
    EPS (US cents)
      Basic                                     0.78       0.06      1200%
      Diluted                                   0.74       0.06      1133%
    ------------------------------------- ---------- ---------- ----------
    EBITDA(xx)                                     182         81       125%
    ------------------------------------- ---------- ---------- ----------

    (*) 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. Julie Gottlieb, 203-522-8336 jgottlie@us.lenovo.com

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LENOVO GROUP

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