Lenovo has announced results for its third fiscal quarter ended December 31, 2016. Quarterly revenues were US$12.2 billion, a 6% decrease year-on-year. Third quarter pre-tax income was US$101 million, a 68% decline year-on-year. Net income fell 67% year-on-year to US$98 million.
The company's gross profit for the third fiscal quarter decreased 15% year-on-year to US$1.6 billion, with gross margin at 13.1 percent. Operating profit for the third quarter was US$138 million, down 64% year-on-year.
The company stated it faced sizeable challenges in its three main lines of business -- data center, mobile devices, and PCs and smart devices (PCSD), in that all three industries showed slow growth or no growth worldwide during the quarter.
Lenovo 's PCSD sales (which include PCs and tablets) of US$8.6 billion represented an increase of 2% on year and 10.2% from the previous quarter. PC shipments were helped by strong growth in North America, where Lenovo increased its shipments by 14% on year. The company stated it shipped 15.7 million PCs worldwide during the quarter. With record-high market share in China, Europe/Middle East/Africa region and Latin America, Lenovo said it remained the worldwide PC market leader with a 22.4% market share.
Lenovo also saw strong on-year growth in shipments of other types of devices. Its tablet shipments were up 10%, Its gaming PC shipments were up 71%, its Chromebook shipments were up 76% and detachable shipments were up 91%.
For Lenovo's Mobile Business Group, which includes Moto and Lenovo-branded smartphones, Lenovo's quarterly sales were US$2.2 billion, an on-year drop of 23%. The company shipped 15 million smartphones in the quarter, In India, the world's third-largest smartphone market, Lenovo had a 9.9% share in the third quarter.
For Lenovo's Data Center Group (DCG), which includes servers, storage, software and services, sales in the third fiscal quarter were US$1.1 billion, down 20%. However, Lenovo's sales were up 27% in North America, 10% in Latin America and 9% in the Europe/Middle East/Africa region.
In China, in the third fiscal quarter, Lenovo recorded consolidated sales of US$3.5 billion, a 2% decrease year-over-year. China represented 28.5% of the company's total worldwide third quarter sales. Pre-tax income in China increased 8% to US$180 million year-over-year, with pre-tax income margin gaining half-a point to 5.2%.
In Asia Pacific, Lenovo had consolidated sales in the third fiscal quarter of US$1.7 billion, a decrease of 14% on year. In Europe, Middle East and Africa, consolidated sales in the third fiscal quarter declined 2.7% to US$3.4 billion and in the Americas, consolidated sales were US$3.6 billion, down 8% on year.