Lenovo Group Ltd. swung to a net loss for its fiscal fourth quarter because of hefty restructuring charges and weak demand.
Lenovo, like other global personal-computer makers, has been hurt as the global recession has made consumers reluctant to upgrade their PCs. Lenovo and its major U.S. rivals, Hewlett-Packard Co. and Dell Inc., have restructured in recent months to cut costs.
Lenovo on Thursday posted a net loss of $264 million for the quarter ended March 31, compared with a net profit of $140 million a year earlier.
The company took a $116 million restructuring charge in the quarter. Sales fell 26% to $2.77 billion.
Lenovo, China's largest PC maker by shipments, said it expects market conditions to remain "very challenging." The company said it expects contraction in the global economy will put continued strain on the commercial and consumer PC markets.The global recession "has significantly affected the world-wide PC-market demand as many large enterprises delayed purchase decisions" and reduced information-technology budgets, Lenovo said. "Even the growth of the China PC market has slowed."
Still, Chief Executive Yang Yuanqing said at a news briefing that he expects the Chinese market to remain Lenovo's main growth driver. He said the company has seen significant improvement in demand in China since the end of the quarter. And there seems to be a corresponding demand in used Lenovo laptops.
Mr. Yang declined to predict when the company will return to profit.
Lenovo booked $146 million in restructuring charges for the fiscal year, mainly for reductions in its work force. Mr. Yang said the company has no plans for further layoffs.
Lenovo reported a $226.4 million loss for the fiscal year, compared with a profit of $484.3 million a year earlier. Revenue fell 8.9% to $14.9 billion.
