Lenovo 2014: Shipped 76 Million Smartphones, 60 Million PCs But Profits Fall

Lenovo’s Q4 2014, its first full quarterly period with the product portfolios of Motorola Mobility’s smartphones and IBM’s (IBM) x86 servers in tow, proved to be a bounty for shipments but slim pickings on profits.

The vendor shipped some 18.7 million smartphones in Q4, 7.8 million of which were Motorola, about 10 percent of the 76 million handsets it shipped for the full year 2014. Similarly, Lenovo moved a record 60 million PCs in 2014, retaining its top dog worldwide position as PC shipment kingpin.

In addition, the vendor said that its sales balance of PCs to mobile had improved in Q4, with 63 percent of revenue for the period coming from PCs and 25 percent from mobile as compared to last year when PCs generated 83 percent of sales. Overall, smartphones, tablets, servers and other services contributing 37 percent of revenues in the quarter compared to 17 percent the year before, Lenovo said.

Still, while Lenovo posted $11.3 billion in Q4 sales, a 21 percent increase from the same period last year, its profits fell some 37 percent to a scant $100 million. In the same vein, Lenovo recorded full year revenue of $46.3 billion, a 20 percent uptick, but its profit fell by $5 billion from the year earlier to $829 million, the company said.

By segment, Lenovo’s PC Group, which includes PCs and Windows tablets posted an 11 percent sales increase to $7.2 billion. Its Mobile Business Group, including Motorola smartphones, Levovo-branded handsets, Android tablets and smart TVs, recorded $2.8 billion in sales for the period. And, Lenovo’s Enterprise Business Group, including servers, storage, software and services, totaled $1.1 billion in sales for the quarter. That unit, however, lost $45 million pre-tax in Q4. Lenovo said its enterprise business remains on track to generate some $5 billion in sales over the next year.

“In view of the opportunities and challenges of the new Internet+ era, we are ready to transform ourselves from making mostly hardware to a combination of hardware and software services,” said Yang Yuanqing, Lenovo chairman and chief executive. “This will spur a new wave of growth for Lenovo in the coming years.”

Indeed, Lenovo is fixed full-tilt on growth, said new North America channel chief Sammy Kinlaw, in an interview with The VAR Guy.

Kinlaw said Lenovo told its channel partners at the vendor Business Partner Executive Summit last week that the vendor has “an appetite for growth such that you might not have seen before. The number one message [to partners] is Lenovo is going to grow in a big way. We have a ‘no lose’ appetite for sales,” he said.

SMBs and midmarket accounts are generating most of Lenovo’s x86 server sales, with the percentage the channel generates increasing from 50 percent when the vendor bought the business from IBM to 70 percent now, Kinlaw said.

Lenovo next quarter plans to announce a new deal registration program, Kinlaw said, to protect channel partners who “invest the time to go after a large win–if they spend the time trying to close the deal that the business won’t be lost to a competitor of theirs.”

TVG Senior Executive Editor and Content Director Charlene O’Hanlon interviewed Lenovo North America channel chief Sammy Kinlaw for this article.