Lenovo is confident that its enterprise hardware business will finally achieve consistent profits if customers are able to secure enough energy to purchase more AI servers.
On Thursday, the Chinese hardware giant announced [PDF] its results for the quarter ending December 31, 2024. The company reported $18.8 Billion in revenue, which is a 20 percent increase year-over-year. Profit increased by 9.75 percent, to $517 millions.
The Infrastructure Solutions Group, the home of Lenovo’s enterprise hardware business, posted record revenues for the third consecutive quarter. This time, the group booked $3.94 billion in sales, up by 59 percent from the same quarter of 2023. It also produced a million dollar profit.
ISG struggled for years, and rarely produced substantial profits. Lenovo’s earnings statement states: “Since acquiring IBM’s x86 business, ISG has adapted its focus from enterprise to include cloud computing and Storage.” CEO Yuanqing Yang stated that ISG “endur[ed]temporary losses for our strategy”. CFO Wai Ming Wong stated that ISG was “building a profitable and sustainable growth trajectory.”
Lenovo executives said similar things in 2020 after ISG had produced profits over three consecutive quarters. ISG president Ashley Gorakhpurwalla stated that the group has the diverse product range it needs to satisfy cloudy customers as well as enterprises, and is ready to cash in on the demand for AI hardware.
“We are confident and firmly believe that AI servers will drive an extremely strong capital investment cycle in the markets we serve,” said Gorakhpurwalla, before predicting demand for AI hardware would come in two phases.
The first phase will fuel “continued investments in infrastructure for a large-scale language model and gen AI” and be followed by the “enterprise AI demands that are expected to grow and become more efficient and available to our enterprise clients.”
Gorakhpurwalla said, before promoting Lenovo’s Neptune Liquid Cooling Technology as likely to allow customers to run AI without blowing their energy budgets. Samsung says rollable laptop displays will be available in April.
Acer doesn’t believe tariffs in the USA or anywhere else will slow down AI or other businesses.
Yuanqing Yang, Lenovo’s CEO, said that the company already faces high tariff barriers in India and Brazil and has developed both in-house and outsourcing manufacturing facilities around world to avoid import duties.
The Lenovo CEO was pleased that more than 46% of Lenovo’s revenue came from sources besides PCs. This reflects a plan to diversify income sources. The Solutions & Services Group, which offers managed services and IT-as a service, grew by 12 percent to reach $2.3 Billion in quarterly revenue.
Intelligent Devices Group (which includes PCs, Motorola Smartphones, and many other gadgets) also grew by 12 percent, delivering $13.78 billion in revenue. Motorola, now a Lenovo company and a top-five brand of smartphones (except in China), had its best quarter ever. Lenovo wants to make it a top three brand, which means that only Samsung and Apple would sell more handsets. (r)
