Lenovo

Lenovo's financials for fiscal 2008 ending March 31 are out. Q1 2009 (= Q4 of their fiscal year) is pretty dismal:

- Compared to last year, sales revenues are down 26 %.

- They don't provide a sales breakdown by region. But they do tell us the change in "PC shipments":

* China: +4 %
* Asia Pacific: -32 %
* North America: -19 %
* Europe -13 %
* Worldwide total: -8%

- As shipments are down 8 %, whereas revenues are down 26 %, average unit prices apparently declined by 18 %.

- Lenovo gained market-share in China (total industry shipments were down 0.1 % yoy in the Chinese market).

- Particularly in China, customers increasingly went for low-price products, i.e. China sales revenues probably declined 15-20 %, in spite of the reasonably-looking 4 % increase of "shipments".

- Lenovo lost 268 m US$ in the quarter.

- There is no profit breakdown by region for the quarter. But the full year results show negative operating results for all regions except China (in total: -450 m $), whereas China was profitable (+350 m $).

Conclusion:

1. The worldwide PC market is very weak (as in: contracting sharply by all measures).

2. China's PC market is weak (as in: at best stagnating in volume terms, and dropping sharply in value terms). Whatever it is that Chinese consumers are buying, it certainly isn't computers.

3. Lenovo may be a global player, but a struggling one, and has to subsidise its foreign operations with Chinese profits.