- Title: CHINA/FILE: World's fourth-largest PC maker Lenovo aims for profitability in 2010
- Date: 11th February 2009
- Summary: BEIJING, CHINA (FEBRUARY 10, 2009) (REUTERS) LENOVO CHAIRMAN LIU CHUANZHI TALKING TO JOURNALIST (SOUNDBITE) (Mandarin) CHAIRMAN OF LENOVO LIU CHUANZHI SAYING: "What we are preparing for is that we can't do worse this year, and from next year on, we need to make profit again. The current financial turmoil hits the U.S. and European markets more seriously than us, so as Prem
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- Topics: Economic News,Science / Technology
- Reuters ID: LVADABVL7VEWZ8285K5IJ5GWNF9S
- Story Text: The world's fourth-largest PC maker Lenovo says it will focus on emerging markets and low-cost personal computers in order to return to profitability in 2010.
Lenovo Group the world's fourth-largest PC maker, said on Tuesday (February 10) it would focus on China and other emerging markets and low-cost personal computers as the route back to profitability in 2010.
Chairman Liu Chuanzhi forecast further losses this calendar year and ruled out dividends for fiscal 2009 and 2010.
Paying dividends from cash reserves would not be appropriate, he said.
But the chairman said he expected the company to be profitable in 2010.
"What we are preparing for is that we can't do worse this year, and from next year on, we need to make profit again. The current financial turmoil hits the U.S. and European markets more seriously than us, so as Premier Wen Jiabao has confidence in the Chinese market, I am confident too," the chairman said from his offices at state-owned Legend Holdings, which owns about 42 percent of Lenovo.
Liu returned to the company he founded 25 years ago when he was named Lenovo's chairman last week, just days after it posted a $96.7 million quarterly loss, its first in three years, and reshuffled top management.
Lenovo posted the smallest growth last year of the world's top four PC makers. Its shipments grew 8 percent, compared with a 53 percent gain for Acer,13 percent for Hewlett-Packard, and 11 percent for Dell.
Lenovo had around 7.5 percent of the global PC market in 2008 when it was overtaken as the No.3 player by more aggressive Acer, according to research firm IDC.
The company's focus will be switched to the emerging markets, said Liu.
"For emerging markets, the impact of the financial crisis is not so profound, so under the current situation, we are preparing to spend one year restructuring, which means we will put our emphasis more on sales, supplies and design in these emerging markets. It will take one year to finish that and for it to make a profit," said the 65-year-old Liu.
The chairman also said the U.S. and European markets are too important to lose.
"We must keep the market margin in those markets. If we focus too much on the emerging markets and los e the U.S. and European markets, it would be very hard to win them back in the future, because for Lenovo, branding is very important. It is very difficult to make ourselves known in the developed countries, so we will not back off from market in the developed world," he said.
Liu said Beijing's huge 4 trillion yuan ($586 billion) stimulus package aimed at boosting domestic consumption will help Lenovo extend its dominant position in China.
He said Lenovo expects to begin making a profit in 2010 and acquisitions would be an important part of his strategy in expanding in emerging markets.
Of the 17 analysts polled on Lenovo by Reuters Estimates, 11 had a "sell" or "underperform" recommendation.
IDC said worldwide PC shipments would rise 3.8 percent in 2009 -- while analysts estimate that Lenovo will continue to see a 15.3 percent fall in sales -- implying a further eroding of its global market share.
Analysts expect Lenovo to rack up more losses in four of the next five quarters, hitting bottom in the current quarter with a $153.6 million loss. - Copyright Holder: REUTERS
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