Lenovo reports $16 million loss

CHINESE NOTEBOOK maker Lenovo Group, the world's fourth-largest personal computer manufacturer, has reported a $16 million quarterly loss.

The outfit said it is facing pressure from weak global demand and intense competition.

This time last year it reported a $110 million profit, although it was miserable because sales fell 17.9 per cent from a year earlier to $3.5 billion.

CEO Yang Yuanqing said in a statement that Lenovo showed strong progress this last quarter but faced numerous challenges.

Its global PC shipments rose 1.1 per cent from a year earlier while industrywide shipments fell 3.3 per cent, which is something it should be happy about. However average selling prices fell by 20 per cent due to competition.

Another problem for Lenovo is that it has been hurt by its reliance on sales to commercial customers, which have responded to the worst global economic downturn since the 1930s by cutting spending more sharply than consumers.

So far Lenovo won't say it has seen the bottom of the global downturn either. The global economic crisis continues to hit its core customers.

Lenovo has restructured, which it expects will save it $300 million a year.

Many of Lenovo's problems appear be due to sluggish US and European demand.

Revenue in China was $1.7 billion, unchanged from a year earlier, while unit shipments rose 15 per cent. While sales have been good in China, Lenovo has started to face competition there from HP and Dell. µ