Lenovo profits are down a staggering 75% in the 'new normal' PC market

Alfonso Maruccia

Posts: 382   +169
The big picture: The PC market is adjusting to the post-pandemic world, compelling companies to grapple with the fact that customers no longer need to update their machines as frequently as they have in recent years. The pace of the PC business is slowing down, and Lenovo is being particularly impacted by this new normal.

The current PC market is melting Lenovo's profits. The Chinese manufacturer recently published its financial results for the fourth quarter of fiscal year 2022/23, choosing to highlight the positive results in ancillary business divisions while the PC group is experiencing a substantial downsizing.

In the three-month period ending March 31, Lenovo reported revenues of $12.6 billion, marking a 24% downturn compared to the same period in the previous year. Pre-tax profits plummeted a staggering 75% to just $130 million, largely due to workforce restructuring charges.

Lenovo's Intelligent Devices Group, the business division for PC and smart devices, recorded a 33% revenue decrease year-over-year, dropping from $14.69 billion to $9.79 billion. The traditional PC business experienced an unprecedented return to relevance during the Covid-19 pandemic as customers needed to refresh their machines to work, relax, and communicate from home.

The period of heightened demand seems to be largely behind us now while Lenovo's PC inventory is saturated and people are not upgrading their machines as much. In 2021, PC shipments swelled to 350 million, and manufacturers were unable to properly satisfy the unprecedented demand for new systems. According to Gartner's estimations, the first quarter of 2023 – which aligns with Lenovo's fourth quarter – saw a 30% drop in PC shipments to 55.1 million units.

Despite the slowdown, Lenovo maintains that actual sales to end users indicate a "more moderate decline" in demand. The company continues to hold its position as the world's largest PC manufacturer. However, the Chinese corporation reported its first profit decline in three years in the third quarter. In Q4, the company also incurred a one-time, job-cutting restructuring charge of $249 million.

In spite of the sobering results in the Intelligent Devices Group, Lenovo is still trying to impress shareholders with more positive results coming from its other business divisions. The Infrastructure Solutions Group, responsible for enterprise and server sales, saw a 37% surge in revenue to $2.2 billion. Meanwhile, the Solutions and Services Group, which oversees managed services, recorded a 22% increase in revenue and a 16% boost in operating profits.

For the full fiscal year, Lenovo reported a revenue decline of 14% to $61.9 billion, and pre-tax profits dropped by 23% to $2.13 billion.

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Posts: 598   +1,088
Covid and post covid both have shown that most company’s demand forecast is what happened last year +/- a few percent regardless.

Unprecedented demand due to a unique global event? Yeah, that will probably happen again this year.

daffy duck

Posts: 123   +89
Does this mean they are going to lower their ludicrous prices in Australia. Given how bad their QC is on normal laptops which often requires you to buy 3 to find a good one, they deserve to suffer big time.


Posts: 2,279   +4,450
Even for smartphones we've seen that people still keep them around for a good 2 years on average and that's for a device they're far more likely to misplace or accidentally damage when dropping and such.

Laptops and PCs are meant to last way, way longer. Honestly if you got a laptop anywhere near the beginning of the pandemic you're gonna be set with it for a good 4-5 years and many people keep the same laptop for even longer: there's just nothing really demanding going on people just want to do spreadsheets and watch videos on their laptops.

Like if they could also be feasible gaming devices maybe but even the best of the best in terms of performance and efficiency from AMD from devices that are mostly not even out yet with the 7840u will likely get you like 30-40 FPS on the latest AAA games on a laptop so not really likely. In fact the steam deck has proven that type of device has a better chance at explosive growth than good old laptops which are mostly work horses.

Maybe Lenovo should think about a 7-10 inch hand held gaming device that could do some good numbers for them, we'll see how many Allies Asus manages to move but it might end up being very successful.


Posts: 2,019   +1,081
People got more computers to work from home instead of using their work computers.
Now they went to work and dont need new ones anymore.
Eventually the sales will go up.


Posts: 192   +239
People got more computers to work from home instead of using their work computers.
Now they went to work and dont need new ones anymore.
Eventually the sales will go up.
Yes I’ve interpreted the current sales slump as a temporary market correction to the tech purchasing splurge that happened over the human malware period.


Posts: 818   +689
This should have been the norm in a sense that PC demand have been declining. Anyway, I have also stopped buying Lenovo products because I realised that there is something fishy about their laptops. All the 3 Lenovo laptops always gets port scanning warnings a few times every single day, but not with PCs from other manufacturers. Initially I thought it is just a remote case, but given recent 3 Lenovo laptops always run into this problem, it is clearly not a remote case.


Posts: 4,766   +7,340
I like Lenovo's laptops for one reason: the keyboards, which are the best in the industry. Their prices are also generally pretty competitive. Unfortunately, their quality control is very hit and miss. If you get a good one you're set for years. If not, you'll be hating life. What I would dearly love to see is a Lenovo 2-in-1 with a numpad, at WUXGA or WQXGA resolution and a decent GPU (Radeon, RTX 2070 or better, even an ARC). So far I haven't found this kind of unicorn being produced by anyone.


Posts: 771   +425
Not sure if it's a scam, Lenovo has a desktop gaming PC selling on Amazon with 7700x and rtx 4080 with windows 11. My friend took a leep of faith and will let me know how it goes.

Lenovo Legion T5 Gamer Desktop Computer (NVIDIA GeForce RTX 4080 16GB, AMD 8-Core Ryzen 7 7700X Processor (Beats i7-12700K), 32GB DDR5 RAM, 512GB NVMe SSD + 2TB HDD, Windows 11 Home) w/Gaming Bundle https://a.co/d/5sMcjAg