Yesterday, Lenovo Group published its financial report up to March 31, 2018. During the reporting period, consolidated revenue of Lenovo increased 5% year-on-year to US$45.35 billion.
Under the new U.S. tax law, Lenovo Group recorded a one-off non-cash shortfall of US$400 million in deferred income tax assets and a loss attributable to equity holders of US$189 million. In the same period last year, profit attributable to equity holders was recorded at US$535 million.
Among them, income from mobile business decreased by 6% year-on-year to US$7.241 billion, accounting for about 16% of the total revenue. Excluding derivative non-cash expenses related to mergers and acquisitions, the pre-tax operating loss was US$463 million, indicating an improvement over the previous fiscal year.
Yang Yuanqing, Chairman and CEO of Lenovo Group, said in an interview with the media later that the mobile phone business of Lenovo was indeed at a loss, and investors hoped that we could stop the loss first. However, the North American and Latin American markets grew by 40% last year. The Chinese market began to show a rising trend. It is the only mobile phone market in the global market that maintains investment, allowing us to struggle in a way of loss.
“This way is not allowed in other markets. We do business where we can make money. We shrink first where there is no money to make. However, it is not the same case in China. Strategy of Lenovo on mobile phones is to lay the foundation first and then wait for the opportunity.”
"The mobile phone business in China has been in the worst situation. There is nothing more to fear. Nevertheless, our mobile phone business is indeed not doing well, but it is far from giving up. It continues to be an important part of our strategy. China is of great importance and the market is big. Although it is losing money in the Chinese market, we will still increase investment."