Capital Calls: Lenovo's battery is running low - Reuters

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An employee gestures next to a Lenovo logo at Lenovo Tech World in Beijing, China November 15, 2019. REUTERS/Jason Lee - RC2IBD9SS335

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POWER-SAVING MODE. The pandemic has revived once-sluggish demand for personal computers and tablets, but Lenovo (0992.HK) may struggle to fill it. Quarterly sales at the $15 billion PC maker surged 48% from a year earlier – the highest growth in almost a decade. That helped turbocharge a sixfold increase in net income to $260 million.

That looks unsustainable. Boss Yang Yuanqing reckons the global chip shortage will last another 12 to 18 months. Lenovo outsources to third-party manufacturers and has its own in-house capabilities, but an executive estimated the supply-chain snags still knocked 20% off the company’s shipments. Inventory held by Lenovo retailers in certain countries has dwindled to as little as two weeks – less than half the usual levels. Analysts polled on Refinitiv Eikon on average expect revenue to be largely flat in the current fiscal year to March.

A 30% rally since the start of January has powered Lenovo shares to a near six-year high. Holding that charge may be difficult. (By Robyn Mak)

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Capital Calls: Lenovo's battery is running low - Reuters
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