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Home Economy Finance

Lenovo: Profit Drops 64%, Revenue Beats Forecasts

…as Market Challenges Weigh Heavy

by Joan Aimuengheuwa
May 22, 2025
in Finance
0
Lenovo Profit Drops 64%
Lenovo

Lenovo

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Lenovo has reported a 64% drop in quarterly profit due to a sharp decline in warrant value and lower returns from parts of its enterprise business. However, the company posted higher-than-expected revenue.

The world’s largest PC maker earned $90 million in net profit for the quarter ending 31 March. Analysts had projected more than double that figure, with expectations set at roughly $225 million.

Nonetheless, revenue surged to $16.98 billion, surpassing the $15.6 billion target set by analysts. The increase, driven largely by sales in personal devices and infrastructure solutions, provided a brief reprieve from the pressure weighing on the company.

We can see that Lenovo’s financial picture is complicated. On the one hand, there’s rapid growth: server-related revenue rose 64% year-on-year, while cloud service offerings grew 22%, pulling in $2.2 billion. 

On the other hand, profitability is being dragged down by losses on financial instruments and narrowing margins in its infrastructure business.

The company’s ability to stay competitive globally is being tested by trade risks, especially with the United States. As a business that depends heavily on Chinese manufacturing while generating more than a third of its revenue from the Americas, Lenovo finds itself in a delicate position.

PC shipments grew 11% in the first quarter of 2025, according to market researcher IDC. The increase was driven in part by businesses and consumers rushing to place orders ahead of incoming U.S. tariffs on Chinese goods. That urgency might not last.

“The uncertainty surrounding U.S. tariffs and associated inflationary pressure could hurt PC demand in the subsequent quarters of 2025,” IDC warned in its report. 

Citi analysts also noted that price adjustments on consumer products may be speedy, but renegotiating contracts on commercial systems, which account for nearly 70% of U.S. sales, will take time.

Lenovo’s recent launch of AI-integrated PCs helped lift its smartphone and tablet business. CEO Yang Yuanqing sees this shift as key to the company’s next phase. “This has been one of our best years yet, even in the face of significant macroeconomic uncertainty,” he said.

Annual revenue hit $69.08 billion, the second-highest in Lenovo’s history, while full-year profit rose 37%. Still, its Hong Kong-listed shares dropped more than 2% after the results were released, another reminder that investors are watching profit margins more closely than sales figures.

The firm insists it’s prepared for whatever comes next. “Our global manufacturing footprint and diverse supply chain give the group maximum flexibility and resilience to navigate through uncertainties,” Lenovo stated.

But flexibility has its limits. Analysts agree that the company’s exposure to tariff-related shocks could continue to disrupt both short-term performance and long-term planning.

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Tags: AI PCs ImpactGlobal PC ShipmentsInfrastructure Solutions Group LenovoLenovoLenovo EarningsLenovo Financial ResultsLenovo Profit DropLenovo Q4 2025Lenovo revenuePC Market TrendsUS Tariffs Tech
Joan Aimuengheuwa

Joan Aimuengheuwa

Joan thrives at helping individuals and businesses scale via storytelling...

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