Lenovo, the world's the biggest computer manufacturer, reported a smaller-than-expected first-quarter loss, thanks to demand stoked by China's massive stimulus package, but its stock fell on cautious comments.
Lenovo has been worse hit than rivals such as Acer and HP in the downturn due to its reliance on corporate spending, stemming from its purchase of IBM's laptop PC arm in 2004, analysts said.
Shares in Lenovo, one of the biggest beneficiaries of China's move to encourage consumer spending, have surged 50 per cent in the three weeks to Tuesday, outperforming the Hong Kong market.
The PC sector has been showing early signs of a recovery in recent months, with shipments in the second quarter of this year falling less than expected, and chipmaker Intel declaring that the worst was over for the industry.
Lenovo today reported a net loss of $16 million in April-June, its third straight quarterly loss but better than market expectations of a $54 million loss and smaller than the previous quarter's $264 million loss.
China continued to drive much of Lenovo's growth, accounting for about 48 per cent of its revenue and led with a 14 per cent growth in sales, as the company turned its focus back to its traditional strongholds of China and other emerging markets.
Nearly half of all computers sold under a rural subsidy programme in China in the first six months of this year carried its brand name.
Lenovo remained cautious on its outlook and retained its forecast of returning to profitability in the third quarter ending in December.
Lenovo's overall revenue fell 17 per cent in the first quarter from a year ago as companies froze technology spending, and further hit by rapidly declining prices due to the growing popularity of low-cost netbook PCs.
The company said it will invest further in China to expand its market share and profitability.
Lenovo grew its share of the global PC market in April-June by 0.5 percentage points to 8.7 per cent, research firm IDC said, reversing consecutive quarters of falling market share.
Reuters