I need the full text of an article: “Lenovo’s Home Court Advantage”
Thanks…
I may through school, give me a few minutes.
edit: can’t seem to find any recent wallstreet articles via our databases. sorry!
Lenovo’s Home Court Advantage.
By ANDREW PEAPLE
Back in the black, and how. Lenovo’s strategy of refocusing on the Chinese market is starting to show some return.
Its domestic dominance, though, hasn’t solved all of the company’s problems. In fact, it’s raised a new one. Margins are deteriorating as Lenovo increasingly sells to customers outside China’s top cities.
Lenovo posted a $53 million profit in the September-end quarter, though $38 million of that was a gain from investment disposals.
Still, the profit ended a three-quarter streak of losses and is a clear sign the company’s leading position in China is paying off: It now has 29% of one of the few markets showing significant growth world-wide. In turn, Lenovo now holds an 8.9% share of global PC shipments, its highest ever.
The focus on China and other emerging markets was part of a revamp Lenovo’s management announced earlier this year.
Necessity as much as foresight hastened that change. Lenovo’s 2005 takeover of IBM 's PC business never delivered the kind of global market presence the Chinese company longed for.
Nonetheless, Lenovo clearly knows the China market well and has benefited this year from Beijing’s economic stimulus efforts, notably its subsidies to help rural Chinese people buy computers. In all, Lenovo’s PC shipments in China rose 22% on-year over the six months to the end of September.
But gross margin for the first half dropped to 10.8% from 13.7% a year ago, a result of lower selling prices and competition that Lenovo’s impressive cost control couldn’t fully offset.
This erosion could continue as competition heats up. Despite its domestic advantages, Lenovo saw its market share in China rise only 0.1% year-on-year.
Down the road, Lenovo could also find itself at a disadvantage as developed markets start buying again and rivals find themselves in better positioned to sell higher-margin desktops and notebooks.
But for now, Lenovo is winning one of the few games in town.
Write to Andrew Peaple at andrew.peaple@dowjones.com
A nice trick is to just Google search the title of the article for access to the full article.
Thank you! :tup: