Lenovo Admits Domestic Phone Unit 'Sunk To The Bottom'

By Dominik Bosnjak May 25, 2018, 7:57am
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Motorola owner Lenovo is aware that its "phone business in China has sunk to the bottom," CEO Yang Yuanqing told local media on Thursday. The firm's smartphone unit is still bleeding money and is experiencing a significant decline in sales, with its fiscal 2017 revenues dropping 16-percent to $7.2 billion, according to its consolidated financial report published yesterday. Despite disappointing results, Mr. Yang maintains Lenovo is "far from giving up," having added how the recent performance drops are "part of the strategy." The 53-year-old sees the company's home country as a unique market in which original equipment manufacturers are able to survive even while losing money due to lucrative investments that are still trending, though it's presently unclear how much external capital Lenovo's mobile business would be able to attract if it doesn't show more significant performance improvements in the near term, provided it opts to seek outside funding.

The fact that the firm now hit its figurative bottom in China also means it has "no fear anymore," Mr. Yang insists, adding that the tech giant's investments in the local mobile market will continue increasing because the Far Eastern country is "too important" of a market to give up on. Lenovo so far withdrew its mobile products from nearly 80 countries, with its foreign strategy prioritizing now profits through cost-cutting over rapid growth, unlike the new approach to reviving its operations in China. Recent estimates suggest Lenovo sold fewer than two million handsets in the country over 2017, with that figure being effectively irrelevant in the world's largest smartphone market which even pushed out global leader Samsung due to its extreme competitiveness and quickly evolving business models.

The Hong Kong-based company is still touting its data center and PC business growth as highly positive indicators of its overall long-term prospects, with its fiscal 2017 revenues being up five-percent year-on-year. Lenovo's subsidiary Motorola isn't doing much better in China but is largely successful in Latin America and is also the fastest-selling unlocked handset brand in North America, its recently appointed President Sergio Buniac said last month.

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May 25, 2018, 7:57am
Source: TechNode
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