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It marks the four consecutive quarters that the world’s largest PC maker has experienced a sales decline and comes after Lenovo reported a 14% drop in annual profit for the year ended in March, its first annual decline since 2019.
Revenue in the April-June quarter fell to $12.9 billion, below a $13.84 billion average of seven analyst estimates compiled by Refinitiv.
The COVID-19 pandemic gave a huge boost to electronics sales as consumers and companies alike stocked up on equipment or upgraded existing gear to accommodate a shift to remote work. However, revenue started contracting last year as demand began to fall, weighed down by rising interest rates and soaring inflation.
The pace of the recovery remains weak and many retailers still grapple with unsold inventory, forcing PC makers and their suppliers including chipmakers to adjust production volume and prices.
“The group’s PC business is stabilizing and well-positioned for a year-on-year recovery in the later part of 2023,” Lenovo said in a statement.
Global PC shipments fell by 12% in the second quarter of 2023, according to market research firm Canalys, a big improvement from more than 30% drop in seen in the preceding two quarters.
To improve profit margins, Lenovo has been expanding non-PC businesses such as servers and information technology (IT) services, but its device business that includes PCs, smartphones and tablets still accounted for nearly four-fifths of group revenue.
Net income attributable to shareholders tumbled 66% to $177 million, versus analysts’ $212.49 million estimate.
Lenovo shares fell 0.9% after the earnings release, compared with a 0.1% decline in the benchmark index.
