Lenovo's latest claims of impressive year-over-year revenue increases for the first fiscal quarter is "somewhat misleading", as the same period last year only includes two months of revenue contributed by IBM's PC Division, Gartner noted today.
The comments come after Lenovo Group reported results for the first fiscal quarter of 2007, which ended on 30 June 2006. Its announcement included the statement that its revenue of $3.5bn jumped 38 per cent from the same period in 2005.
"Lenovo still has a great deal of work to do in building its brand awareness and optimising its operations. The vendor has made considerable progress on the latter challenge by improving its operating profit, excluding a restructuring charge at 1.7 per cent this past quarter, compared to 0.5 per cent in the previous quarter," said Gartner senior research analyst Joy Shao.
She added that the firm continues to lose money in the Americas and EMEA. " Some key developments to watch for are Lenovo's progress in expanding its own channels, as evidence that Lenovo is relying less on IBM’s sales force, and an increase in Lenovo's server and mobile handsets offerings outside of China."
Gartner Dataquest's 2Q06 preliminary market analysis shows Lenovo PC shipments grew at 14 per cent – three per cent higher than the worldwide PC market average rate. China continued to contribute most of Lenovo’s growth.
In other regions, Gartner notes that the firm faced "fierce price competition " from HP and Dell as these companies battled for market share. In Europe, the Middle East and Africa (EMEA) and Japan, Lenovo grew at a rate well below regional averages. By contrast, Lenovo made some progress in the US market during the quarter, although the year over year growth rate was still below the US average.
A new channel strategy targeting the small and midsize business (SMB) market and the introduction of the Lenovo 3000 line was found to have helped boost sales in the US. This range helped to distinguish cheaper Lenovo products from the premium-priced IBM Think lines. It has also helped increase Lenovo brand awareness outside China.
Gartner advises buyers to take advantage of the favourable pricing on Lenovo products during the firm's ongoing transition period.
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