Lenovo Reports First Quarter 2006/07 Results

Lenovo Reports First Quarter 2006/07 Results

Lenovo Group today reported results for the first fiscal quarter ended June 30, 2006. For the first quarter, consolidated revenue increased 38 percent year over year to US$3.5 billion. The first fiscal quarter ended June 30, 2005, reflects two months’ contribution from Lenovo’s acquisition of IBM’s Personal Computing Division (PCD), which closed on April 30, 2005.

During the first fiscal quarter, Lenovo’s worldwide PC shipments grew more than 12 percent year over year, ahead of the industry average of 9 percent. Excluding restructuring charges taken in the first quarter, pre-tax income totaled US$34 million. Net cash reserves as of June 30, 2006, totaled US$741 million.

In March 2006, Lenovo announced an action plan to enhance responsiveness to customers in all of its markets, strengthen Lenovo’s global competitive position, and increase operational efficiency. As a result, Lenovo’s reported results reflect a restructuring charge relating to the plan of approximately US$19 million taken in the first fiscal quarter which ended June 30, 2006. Reflecting that restructuring charge, Lenovo reported pre-tax income of US$15 million and basic earnings per share for the first quarter of 2006/07 of 0.47 HK cents, or 0.06 US cents.

“Lenovo delivered solid results in the first quarter, meeting our expectations and those of our Board,” said Yang Yuanqing, Lenovo’s chairman. “The key advantages of Lenovo are twofold. First, we are well positioned in high-growth areas, such as emerging and SMB markets. Second, we have a very clear strategic focus on our PC business. With this strategy, we continue to sustain our strong momentum in China while enhancing our relationship business outside of China. At the same time, we are expanding our transaction business outside of China. Going forward, we will continue to implement our strategy with decisive and persistent execution to keep the growth momentum.”

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