Lenovo to miss mobile turnaround target

Lenovo has seen its smartphone business suffer due to higher component prices and fierce competition. (Reuters)
Updated 01 February 2018

Lenovo to miss mobile turnaround target

HONG KONG: Personal computer maker Lenovo Group said it would miss a target to turnaround its mobile business by March, after earlier posting a quarterly loss due to a one-off charge linked to tax reforms in the US.
The company, which lost the world’s largest PC maker crown to HP in 2017, has seen its smartphone business suffer due to higher component prices and fierce competition.
The group’s phone problems started after it bought Motorola Mobility from Google for $2.9 billion (SR10.88 billion) in 2014 but struggled to integrate the assets.
“We will further improve the profitability, but probably breakeven will not happen in the next quarter,” Chairman and CEO Yang Yuanqing said, referring to the mobile business.
The segment, which accounts for 16 percent of Lenovo’s revenue, reported a narrower operating loss of $92 million for the third quarter ended December.
Lenovo will look at the segment’s performance next quarter to decide whether there needs to be a write-off, Chief Financial Officer Wai Ming Wong said on Thursday.
The company’s core PC and smart device business, however, grew in terms of revenue in the third quarter.
The segment, accounting for over 70 percent of Lenovo’s top line, saw an 8 percent rise in revenue over the period, despite a 0.2 percentage point year-on-year drop in market share, thanks to premium products such as datachables.
Lenovo’s overall revenue for the October-December period came in at a three-year high of $12.94 billion, up slightly from $12.17 billion a year ago.
Its bottom line for the period, however, swung to a loss of $289 million, versus a $98 million profit a year ago, dented by the one-off charge of $400 million linked to a reassessment of US deferred tax assets.
Lenovo reiterated that the short-term business outlook was challenging, but said in the longer term US corporate tax cuts would “positively impact” earnings of its operations.
CEO Yang said the company had not discussed shifting more business or personnel to the United States in response to changed tax incentives.
Tax reforms signed into law in December lower the income tax rate for US companies to 21 percent from 35 percent.
On Lenovo’s data center business, which saw a narrower loss of $56 million on a 17 percent year-on-year revenue increase in the quarter, Yang said it was “well on track to deliver a turning around.” He declined to give a timeframe.
Lenovo plans to open 1,000 new retail shops in China over three years to sell a wide range of products from the Lenovo ecosystem, Yang said.
It will also launch more high-end PCs and smart devices such as its Mirage Solo virtual reality headset with Google’s Daydream technology that recently debuted at the CES trade show.

Saudi Arabia and UAE launch a new joint cryptocurrency

Updated 8 min 30 sec ago

Saudi Arabia and UAE launch a new joint cryptocurrency

  • The cryptocurrency will be limited to banks during its first stages
  • The program will also help the two countries evaluate the monetary policies of a centralized currency

Saudi Arabia and the UAE have launched a joint cryptocurrency during the first meeting of the Saudi-Emirati Coordination council Saturday in Abu Dhabi, UAE’s national press agency WAM said.

The cryptocurrency will be limited to banks during its first stages, until the governments have a better understanding of how Blockchain technology operates cross-borders.

The currency operates on the use of a “distributed database between the central banks and the participating banks from both sides,” aiming to protect customer interests, set technology standards and assess cybersecurity risks. The new program will also help evaluate the impacts of a central currency on monetary policies.

During the meeting, representatives of Saudi Arabia and the UAE also signed the Joint Supply Chained Security Cooperation program, which tests the two countries abilities to provide vital supplies during times of crisis and national emergencies, as well as share expertise and knowledge in the field.

All 16 members of the executive committee of the council followed up on the execution of the initiatives mentioned in the Strategy of Resolve.

Representatives also set five other initiatives to enhance the cooperation between the two countries, such as facilitating the traffic between ports, improving airports to make it easier for people with disabilities to travel, creating a financial awareness program for children aged 7-18, starting a joint platform to support local SMEs, and the integration of civil aviation markets,

The committee was headed by Mohammad bin Abdullah Al-Gergawi, minister of cabinet of affairs and the future of UAE, and Mohammed bin Mazyad Al-Twaijri, minister of economy and planning in Saudi. The committee will also monitor the implementation of the initiatives.