Lenovo third quarter net profit falls 67 per cent

Lenovo's revenue fell for a fifth consecutive quarter as sales of two of its major lines of business - smartphones and servers - declined 20 percent or more.

Lenovo on Tuesday reported net income of $98 million for its third fiscal quarter ended December 31, far short of the $159.5 million average estimate of analysts surveyed earlier by Thomson Reuters Eikon.

The gross margin fell to 13.1 percent from 14.6 percent a year ago, and operating profit dropped to Dollars 138 million from USD 379 million. "Our data center business now has a clear improvement plan in place", Yuanqing said in a press release detailing Lenovo's third quarter earnings. Market research firm IDC previously reported that Lenovo's overall PC shipments outpaced the market and it retained its No. 1 ranking in the latest quarter, but rivals HP and Dell Technologies narrowed the gap by growing significantly faster.

Despite the worldwide computer market recession, Lenovo's computer division managed to perform better than a year ago: in the last quarter of 2016, it sold 15.7 million computers and enjoyed a 10 % increase in tablet sales. Lenovo achieved significant increase in sale of gaming PC (+71 percent), Chromebook (+76 percent) and detachables (+91 percent).

The company, which ranks No. 1 in PCs worldwide, posted revenue of $12.2 billion in its fiscal third quarter that ended December 31, down six percent.

While operating costs were down 3 percent year-on-year, Lenovo said the ratio of cost to sales increased, due in part to extra marketing costs for re-launching the Moto brand.

Lenovo remains the world leader in a personal computer market struggling through a prolonged downturn as people opt for smartphones to handle everyday tasks.

The company's efforts include improving its brand recognition and adding new partnerships along with boosting its sales team and making investments in the channel, the company said in a release.

Lenovo generated revenue of $3.5 billion (- percent) in China, $1.7 billion (-14 percent) in Asia Pacific, $3.4 billion (-2.7 percent) in Europe, Middle East and Africa and $3.6 billion (-8 percent) in the Americas.

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