China’s Lenovo, the world’s largest personal computer maker, announced a steep 64% decline in its fourth-quarter profit. The net profit fell to $90 million, significantly below analysts’ expectations of $225.8 million.
This sharp drop was mainly due to a non-cash loss from the decreased value of warrants. Additionally, the company was affected by the U.S. decision in March to double tariffs on Chinese imports related to fentanyl, which hit Lenovo’s costs unexpectedly.
Lenovo’s CEO, Yang Yuanqing, said the sudden 20% tariffs introduced in March had a major impact on the company’s last quarter results. He noted there was no time to prepare for the change, which weighed heavily on profits.
Despite this, Lenovo’s diversified manufacturing network, with 30 facilities across more than 10 countries, helps the company manage such challenges. Yang added that if tariffs increase costs, Lenovo would pass those costs on to customers through price increases.
The company’s shares dropped 5.4%, underperforming the Hang Seng Index, which fell 1.3% on the same day.
On the revenue side, Lenovo exceeded expectations, reporting $16.98 billion for the quarter, a 23% increase from the previous year and above the forecasted $15.6 billion.
The growth was driven by strong performance in its Infrastructure Solutions Group, which saw a 64% revenue increase, and its Solutions and Services Group, which grew revenue by 22%. These divisions include servers and cloud-based software for enterprise clients, showing Lenovo’s expanding footprint beyond PCs.
Despite the quarterly profit setback, Lenovo’s full-year results remain strong, with overall revenue growing 21% to $69.1 billion and net income rising 36% year-over-year.
The company’s strategic focus on hybrid AI, operational efficiency, and global diversification continues to drive growth across all business units and regions.
Related topics:
