MORRISVILLE – Lenovo announced quarterly earnings last week, and noted in a statement that the company posted record highs for earnings and for revenue generation, despite global concerns over supply chain shortages and disruptions due to COVID-19.
The company’s net income grew by 65% year-on-year, the company reported, and is now $512 million with a net income margin improvement of .7 points. That puts the company’s trajectory on target with a previously stated goal to double in three years, the company statement noted.
Revenue also increased, up 23% year-on-year.
For Lenovo North America, growth was up as well, Lenovo NA President Vlad Rozanovich told WRAL TechWire in an interview . That growth included an increase of 22% in market share, year-on-year, for Lenovo’s data center line of business, even in a tough supply chain situation, said Rozanovich.
“Lenovo’s very bullish on the marketplace right now,” he told WRAL TechWire in an exclusive interview
“We see the PC industry — after years of people saying that the PC industry was going to decline — we see the next few years as a robust time for the PC industry. We expect 340-355 million PCs to be consumed each year over the next few years. We don’t see any part of this as a downtrend. Through the supply chain offerings that Lenovo has, the strength that we have in that market, the multiple manufacturing sites we have on a worldwide basis, there’s no other company that is better prepared to make sure that we’re satisfying some of that PC demand, and as part of that we’re expanding, putting more and more focus on the data center side of the business, as well as that software, services, and solutions group. It really is a great time to be in technology, and it is a great time to be a part of one Lenovo, and it really is one Lenovo, we’re looking at all of our components, all of our business units, on how do we satisfy customer demand, how do we make sure we’re building the most innovative products to ensure we’re really enabling this new hybrid workforce.”
However, the company is yet to set specific policies regarding COVID-19 vaccination or testing for its U.S. based employees, including at the company’s Research Triangle campus, said Rozanovich. “Even though we haven’t put a date yet on vaccinations or return to office, we are going to take them seriously, because we do know that they are being mandated down from the federal government,” Rozanovich told WRAL TechWire reporter Jason Parker in an interview on Zoom.
The video interview is below, and a lightly-edited transcript of the conversation appears afterwards.
Jason Parker, WRAL TechWire (TW): I noted that in Lenovo’s most recent earnings report, the company’s net income is up 65%, or $512 million. What can you tell us about those top line numbers and what it means for the company moving forward?
Vlad Rozanovich, senior vice president at Lenovo and Lenovo NA President (Rozanovich): The way I see it, Lenovo’s had an absolutely stellar quarter, and our earnings results and revenue results have shown that. The way I see it, is when I look specifically in the North Americas market, we had growth of about 24% year-on-year in our Q2 timeframe. The thing that I saw most was, even though we saw a little bit of a downturn in the education side of the market, because in the past things like Chromebooks have sold well, what we actually saw was some really nice upticks in the business across our portfolio. In our PC side of things — within our vertical specialties — our numbers for things like workstation sales, healthcare sales, corporate sales, are all very much up year over year, in double digits.
In the North Americas region, we also saw record numbers being driven by our Motorola division. Our top revenue quarter in 16 quarters. We held on to the number three spot — which we secured last quarter — and really reinforced that revenue spot from Motorola, as one of the premiere brands in the industry. And then on the data center side of things, we actually saw about a 22% market share increase year-on-year, even in a tough supply chain situation. We saw all of our businesses grow year-on-year. For the North America number, hitting about $3.9 billion, with that 24% increase on a year-on-year basis.
TW: Lenovo announced earlier this year that it would expand its Solutions and Services Group, or SSG, which itself experienced a 30% year-on-year growth. At Tech World, the company also announce the “everything as a service” model. What was growth like within this group, and what does this look like for the company, moving forward?
Rozanovich: We’re starting to see massive interest across the board, across our PCSD side of the business, our Motorola side of the business, and our data center side of the business. So as you mentioned, over 30% year-on-year growth for the SSG business. What we’ve seen is that the interest level, not just for close-to-the-box software managed systems, but also things like all of our managed services, whether asset recovery, device-as-a-service, or whether its complex solutions. Our pipeline continues to grow in those areas, as many corporations are now looking to say “How do I make sure…?” We’ve seen the trends in the industry of software-as-a-service, and as infrastructure-as-a-service, and so the way that we’re looking at this, from a Lenovo standpoint, and a Motorola standpoint, is that people are starting to say “How do I look at my devices as a service?” We started that with TruScale on the service side, a couple of years ago, and now we’ve really incorporated that umbrella brand of TruScale to include both our PC products, as device-as-a-service under that TruScale brand, as well as our Motorola products as device-as-a-service for mobility products as well.
Lenovo unveils ‘Everything-as-a-Service’ model, new products at Tech World event
TW: With growth often comes reinvestment of that capital into workforce. What is your take on the current state of the labor market in the U.S. and the economy overall?
Rozanovich: When we look at the economy overall, you’re seeing record profitability from many companies, not just Lenovo from a technology standpoint. I think that’s being driven by this new hybrid world that we’re all living and working in. When I think about the transition we saw about education from home and hybrid education over the last 18 months, that’s now shifted to hybrid work environments in the corporate space as well.
Even this week, I was in Houston visiting some of our largest oil and gas customers, and they’re all going through these transformations of the way the offices even look, from areas where everyone used to have their own dedicated office or dedicated cube, they’re all going into these shared hybrid work environments, very open, lots of collaborative office space, lots of smart collaboration devices including some from Lenovo. The way people are operating has changed. Corporations are now getting to the point where they’re expecting a hybrid workforce. And honestly, I think that’s one of the things that we’re expecting, not just in the Triangle, but in other areas. This is going to come down to making sure we’re flexible about the way we look at our employees, making sure that we are engaging on things like flexibility around work, but we’re also seeing that by offering that, it is kind of creating a retention mechanism that we have to use, because the job market is one where companies are pulling from each other. The nice thing about the Triangle is that we do have universities that feed into our early employee programs. One of the things we’ve done is that we’ve invested more in our LASER program, where we hire new college graduates to go into rotational acceleration training programs, giving them a flavor of what corporate life is like. We’re investing in internships, including with some historically black colleges and universities, and we’re investing in these LASER programs where we’re bringing in new talent from the university environment, which is reinforcing our position in the workforce. Our view right now is that it is a very hot labor market, we’re doing everything we can to make sure we are retaining all of our top talent, and doing everything locally to make sure we’re cultivating new talent to come into Lenovo to come work in the RTP area.
TW: The Biden Administration recently put out policies about vaccine requirements for companies with more than 100 employees. What is Lenovo doing at this time in preparation for those rules going into effect?
Rozanovich: Lenovo’s view on this is that we are absolutely going to follow by what the OSHA guidelines are going to call for, from a vaccination or a testing standpoint. We also know there are going to be things, like federal government contracts, that are going to require some of these. So even though we haven’t put a date yet on vaccinations or return to office, we are going to take them seriously, because we do know that they are being mandated down from the federal government.
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