Lenovo laments tariffs and sluggish PC sales as profits nosedive 64%

Lenovo profits dipped 64% for the fourth quarter, according to its latest earnings report, with at least some of the losses pinned on tariffs levelled by the US.

While many of the high tariffs initially rolled out by the US against China have since been reduced on some technology products, they still remain at 20%. At the time, IDC said it expected the tariffs to slash global IT spending in half over the subsequent six months.

"The 20% tariffs announced in March were implemented suddenly and left us no time to prepare. It had a significant impact on our numbers in the last quarter — it’s not a small number," Lenovo’s CEO Yang Yuanqing said in a conference call, according to Reuters, which added he said continued tariffs could lead to price rises.

Indeed, the company stressed in its results that future impact of tariffs could be mitigated.

"Over the past 20 years of operating a global business, Lenovo has established a manufacturing footprint that boasts 30+ manufacturing sites (either in-house or outsourced) in 11 different markets around the world," Lenovo said in a statement.

"The combination of these gives the Group maximum flexibility and resilience to navigate through uncertainties and be more adaptive to the market conditions."

Lenovo laments sluggish PC sales

Alongside the tariffs, Lenovo profits were also hit by wider challenges in the PC sales market. Speaking to Bloomberg, Yang cited macroeconomic uncertainty as a more pressing matter for the company.

“We are worried about uncertainty,” he told the publication. “For the longer term, the PC market is related to the global economy, whether it’ll be impacted by tariffs or geopolitical tensions.”

Analyst firm IDC said earlier this year that it expected largely flat sales for the PC market for the next few years, and that's helped by the looming shift to Windows 11.

Lenovo remains the world's largest maker of PCs, shipping nearly a quarter of those sold globally in the first quarter of the year, according to IDC, followed by HP Inc at 20% and Dell Technologies at 15%.

There's still light on the horizon

For the fourth quarter, Lenovo reported its net income fell to $90 million in 2024/25, marking a sharp decline of 64% from $248 million the previous year.

Despite profits sliding, revenue was up by 23% for the quarter, and net income was up 37% for the full year.

Lenovo also highlighted a second consecutive quarter of profitability for its Infrastructure Solutions Group, with revenue increasing 63% year-on-year. Similarly, by the company’s own estimates, it holds the mantle of global leader in the Windows AI PC domain.

“This has been one of our best years yet, even in the face of significant macroeconomic uncertainty,” Yang said.

"We achieved strong top-line growth with all our business groups and sales geographies growing by double digits, and our bottom-line increased even faster," Lenovo's CEO added. "Our strategy to focus on hybrid AI has driven meaningful progress in both personal and enterprise AI, laying a strong foundation for leadership in this AI era.

That didn't convince markets, however. Lenovo's stock price slid 5.4% in Hong Kong after the results were announced.

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