Lenovo (0992.HK, LNVGY) reports fourth-quarter earnings, beating expectations on both revenue and profit. Ryan McCurdy, president of Lenovo North America, appears on Market Domination to discuss the computer company's growth trajectory and outlook.
McCurdy noted that Lenovo has grown over the past four quarters despite facing some headwinds. He highlighted an 11% increase in business in its North American division, showing that the company “was able to weather the downturn in our industry well.”
One of the key drivers of Lenovo's revenue growth is the introduction of a new AI PC developed in collaboration with Microsoft (MSFT), according to McCurdy, who believes the industry is “ready” to deliver such innovative products, capitalizing on the company's ongoing innovation and growing demand for artificial intelligence solutions.
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Video Transcript
The world's leading PC maker delivered better-than-expected earnings today.
Lenovo's fourth-quarter net profit more than doubled, marking the third consecutive quarter of better-than-expected profits.
It is one of the first companies to bring an AI laptop to market, hoping the device will drive new growth.
Now joining us is Ryan McCurdy, president of North America for Lenovo. Ryan, I'm glad you're still seeing the report that fourth quarter revenue was up 9%.
This was also a better-than-expected profit.
perhaps.
Let's start there.
Ryan, what got you here this quarter?
Hello and thank you for having me.
I'm glad I'm here.
Yes, I'm very optimistic.
In the report we released today, as you said, we continue to be the largest PC manufacturer in the world and lead the PC market resurgence, and we are diversifying our portfolio beyond PCs through our data center and services businesses.
As you know, I'm responsible for North America, which grew 11%, a fantastic result, well ahead of the quarterly results.
Well, I'm encouraged by that trend.
This marks the second consecutive quarter of revenue and profit growth across all of our businesses.
Therefore, we focus on our performance relative to our competitors in North America.
And after 10 consecutive quarters of decline, DC reported that the PC market marked its first quarter of growth, with the company achieving a record 18.2% PC market share.
This marks the fourth consecutive quarter that we have outperformed the market.
So, for us, this signals that we're well positioned to weather this industry downturn, get past it, and seize this huge opportunity in hybrid AI.So, Ryan, what's driving the recovery that you're seeing?
Is it enterprise, is it retail, or, um, you had all the AI stuff in place last quarter and I don't know if the numbers were reflecting there, but what's the driver here?
Yeah, so the AI PC really does represent a new court, a new category.
Um, you know, forecasts and ID CS predict that by '27, A IP CS will account for about 60% of all PC shipments.
So we're on the forefront of that and we have new products coming to market this summer so there's a lot of interest.
As we reported earlier this week, we partnered with Microsoft to unveil our next generation of consumer and commercial A-IP CS, two of which are powered by Qualcomm Snapdragon flagship processors.
These are our latest products.
Well, as I said, the Lenovo Yoga Slim 7 and Lenovo ThinkPad T 14 will be available in the summer.
Really?
We believe this is exciting as we reach new levels of personalization and performance across our portfolio.
So, you may ask, where is the growth coming from?
I think the industry is ready.
As you know, it has been restored in the last few years.
The refresh is coming up and I am super excited.
You know, this refresh cycle is something that all of our partners and customers are expecting after five years of COVID and restrictions, looking to upgrade and we're ready to bring these new capabilities to market.
Ryan.
Well, you mentioned Yoga Slim seven X and I really like that name.
Is this a product that some reviewers are saying is designed to compete directly against the Macbook Air, Apple's Macbook Air?
Do you see the product that way?
Are you hoping to take market share away from Apple?
Yes, it is.
As I said, our view is that this represents a new category and is purpose-built.
They are built to handle advanced AI workloads and use the latest custom hardware and software.
In the latest CPU GP UN PU, you may have heard of the term NPU, which is a lesser known Neural Processing Unit.
This is an AI-specific chip, but you know, Lenovo also has the Lenovo AI Core chip.
These work in tandem with the existing CPU GP U architecture, essentially dynamically adjusting power and efficiency depending on the user's task and the workload being used.
These are exciting new products that are purpose-built and we think are intended to attract new users and users from other ecosystems, and we're very excited about the broader ecosystem and partners.
There's a lot of excitement surrounding the launch of the AI PC, but Ryan, from what I've read, you're working on AI IP CS with Microsoft, not in China but outside of China.
no.
So, what AI capabilities will Chinese customers benefit from?
And Ryan, who provides that?
Well, China has some custom Lenovo software for China.
We are committed to building a broader shared ecosystem. All of the products I mentioned today include the Windows 11 operating system and Co-Pilot Plus capabilities.
Well, that's about our operations in other parts of the world.
Well, my real focus is on the business and the consumer and bringing products across our North American portfolio to serve that market.
Are there any issues arising related to the tariff environment or trade environment that could impact supply?
No, I can honestly say that in the last five years, this is probably the best thing I've seen.
Well, you know, there are over 100 million components.
There are constraints here and there due to various issues, including supply chains.
But the fact is, we're in the cleanest position we've ever been in and, as I said, I think we're ready to take advantage of the opportunities that are in front of us.
Over the last few years, there has been a huge installed base in the market.
Well, there are always some issues, but I think we're in the healthiest position we've been in for years.
Ryan, as you know, you were very passionate about A IP CS.
What do you think about AI and AI-enabled smartphones, Ryan?
Are you passionate about that category too?
Yeah, I mean, we're keen across the portfolio.
I think one of Lenovo's real differentiators is its pocket-to-cloud portfolio.
The Pocket is a companion to the Razor, a line of Motorola phones that does everything right up to the cloud.
So, if you look at this.
Yes, we see opportunities.
Well, when we say AI for all, we are looking at hybrid A IA I.
At Tech World last fall, we announced a hybrid AI approach, where public, private and personal foundational models coexist.
And we envision a world where AI can run securely on a device, on a phone, on a PC, or in a data center.
Oh yeah, and it protects user privacy.
As we all know, AI infrastructure needs, especially servers and storage needs, will increase dramatically over the next 3-5 years.
Hybrid AI is driving increased infrastructure demands and customers are increasingly looking for custom solutions, especially AI consultancy design, deployment, and maintenance.
It's a really exciting time and we continue to build out that portfolio with our ecosystem partners.
In the past two weeks alone, we've announced new services with NVIDIA Netapp and the new Tai.
I could go into more detail on those, but it's a really exciting time with a lot of innovation and a lot of work going into our overall portfolio, from phones to data centers.
Ryan, thank you so much for taking the time to chat with us today.
appreciate.
Thank you for inviting me.
