Ever since Lenovo acquired IBM’s x86 server business in 2014, one thing has proven elusive: profit.
Now the company can point two consecutive quarters and a full year in the dark.
The Chinese kit maker released its fourth quarter and fiscal year 2022 results yesterday, with quarterly revenue of $16.7 billion, up 7% year-over-year. Annual revenue reached $71.6 billion, an increase of 18%. Annual net income exceeded $2 billion.
The infrastructure solutions group exceeded the limit for an annual profit of $6.7 million on revenue of $7.14 billion, with an annual revenue increase of $840 million producing black ink. Most of the profits were made in the fourth quarter, which Lenovo was pleased with because that quarter included shutdowns in the tech-centric Chinese city of Shenzhen, and it put a bend in the company’s supply chain. company.
Executives said Lenovo had absorbed the increased cost of some components, but would soon pass those costs on and make better profits. Focusing on high-margin products also helped.
Lenovo also announced that it had turned around its Motorola smartphone unit, which was profitable last quarter. But executives have warned that PC sales could plummet, thanks to lockdowns in Shanghai causing supply chain issues and suppressing consumer demand. Management said global demand should keep the company’s PC sales steady, but short-term swings are to be expected.
Chairman and CEO Yuanqing Yang called the current market situation in China and around the world “difficult” and cautioned investors accordingly.
Alibaba was even more cautious, declining to offer guidance for the year ahead after reporting better-than-expected results but still representing the mega-corporation’s slowest growth ever. Quarterly revenue of $32.2 billion for the quarter was a 9% jump year-over-year. Annual revenue of $134.5 billion represents an increase of 19%.
The company’s cloud generated $15.8 billion in annual revenue, including $3 billion in the fourth quarter. Fourth quarter revenue grew year-over-year despite revenue being less than a quarter of the annual total – it appears Alibaba Cloud may experience seasonal fluctuations.
The company said the lockdowns hurt the last quarter, making it difficult to complete hybrid cloud projects.
Chief Financial Officer Toby Xu said that in fiscal 2023, Alibaba Cloud “will focus on high-quality revenue growth, invest in talent and R&D, improve operational efficiency, and expand to the international”.
This latest tactic will be watched closely, as Alibaba Cloud has the largest footprint of any Chinese cloud outside the country’s borders.
While both companies clearly have cause for concern, at home and abroad, they can at least report that the red ink has stopped flowing in their enterprise IT operations. ®