BEIJING, China: China’s Lenovo reported a steep 64 percent drop in fourth-quarter profit, falling significantly short of analyst expectations and triggering a sharp decline in its share price.
The world’s largest personal computer maker blamed the profit slump primarily on a fair value loss related to warrants. However, U.S. President Donald Trump’s surprise decision in March to double tariffs on Chinese imports tied to fentanyl production also dealt a heavy blow to Lenovo’s bottom line.
“The 20 percent tariffs announced in March were implemented suddenly and left us no time to prepare,” said CEO Yang Yuanqing during a post-earnings call. “It had a significant impact on our numbers in the last quarter – it’s not a small number.”
Lenovo shares fell 5.4 percent in Hong Kong following the earnings release, underperforming the broader Hang Seng index, which dropped 1.3 percent.
While some U.S.-China tariffs have been rolled back in recent weeks, the 20 percent duty on fentanyl-linked imports remains in place. In an interview with Reuters, Yang said the company may raise prices if tariffs continue to impact costs. He noted that Lenovo’s global network of 30 manufacturing facilities across more than 10 countries provides some buffer against geopolitical pressures.
For the January–March quarter, Lenovo reported a net profit of US$90 million, far below the LSEG consensus estimate of $225.8 million. Despite the missed earnings, revenue for the quarter rose 23 percent year-on-year, surpassing expectations to reach $15.7 billion.
The company’s infrastructure solutions group, which includes server sales, was a bright spot, with a 64 percent jump in revenue. Lenovo’s solutions and services division, which focuses on cloud-based software for enterprise clients, also performed well, with revenue up 22 percent.
While Lenovo’s revenue growth reflects demand recovery and strong enterprise performance, the disappointing profit figures underscore the vulnerability of global tech firms to sudden policy shifts and trade disruptions.