China's computer giant, Lenovo Group Ltd., posted a plunge over 20 percent in Hong Kong stock market on Friday, losing more than a fifth of its value.
This is not the first rout witnessed by Lenovo. On May 24, 2018, it reported a 69 percent drop in fourth-quarter net profit and swung to its biggest annual loss in nine years, the Reuters said.
The exact cause for the tumble this time remains unclear, but it may have a close bearing on Lenovo's commercial layout and the macro environment of the overall industry.
Some industry insiders said that although the global PC market is picking up, it is still a sunset industry, and few bright spots can be found in Lenovo's mobile phone sale.
In September 2014, Lenovo acquired IBM'S X86 server business for 2.1 billion US dollars, thus becoming the third largest manufacturer of x86 servers worldwide, second only to Hewlett-Packard (HP) and Dell.
Expectations were running high for this acquisition at that time. Unfortunately, Lenovo Group suffered considerable losses in 2015, and its server business also fell sharply, resulting in its loss of leading position in Chinese server market since the fourth quarter of 2016.
Yang Yuanqing, the chairman and CEO of Lenovo, attributed the company's failure to their inability to adapt to the new market in time.
In an interview with the media, he admitted that after the cloud computing business of Amazon, Microsoft and BAT (Baidu, Alibaba, Tencent) started, the entire server market quickly tilted from traditional IT to Internet companies. Lenovo failed to establish a product structure and core competitiveness specific to cloud computing companies, hence the decline in performance is inevitable.
Lenovo's mobile business performs poorly. The company set up the mobile department at first light, and after the launch of iPhone 4 in 2010, Yang also made a splash to launch its LePhone to compete, but both of them failed.
In 2014, Lenovo sold 47.3 million mobile phones in the domestic market, which slammed into the top three in China. It also paid huge sums to acquire Motorola's mobile phone business. After that, its performance rocks the bottom, and in 2017, Lenovo scraped into the top ten in China.
The previously well-performing overseas market also showcases a declining trend.
According to the International Data Corporation's (IDC) latest market research, the world's top five smartphone makers in 2017 were Samsung, Apple, Huawei, OPPO and Xiaomi, respectively, with Lenovo once again dropping out of the top five into eighth place. Except for North America and Latin America, Lenovo remains a sector performer in the rest of the world.
Lenovo closed on Friday with a slump of 15.10 percent in Hong Kong.