Lenovo's fourth quarter revenue fell 24% and it cut 8% to 9% of its workforce, the Chinese group said on Wednesday, as demand for personal computers (PCs) continued to slump.
The world's largest PC maker said revenue for the January-March period was $12.63 billion, marking the third consecutive quarterly fall. Lenovo's result compared with a $12.74 billion average of eight analyst estimates compiled by Refinitiv.
For the full year through March, Lenovo said its revenue shrank 14%, marking the first annual decline since 2019.
Chief Financial Officer Wong Wai Ming, said in a call with reporters that Lenovo had cut 8% to 9% of its workforce in the quarter in order to "manage expenses".
Its Chief Executive Yang Yuanqing added on the call that the adjustment was done and Lenovo has no further layoffs planned.
The Covid-19 pandemic gave a huge boost to electronics sales as consumers and companies alike stocked up on or upgraded existing gear to accommodate a shift to remote work.
However, revenue started contracting last year as demand began to fall. For the previous quarter, Lenovo reported a decline in revenue of 24%, its steepest in 14 years.
Global PC shipments across the industry declined 29% in January-March to 56.9 million units, fewer than the same period in pre-pandemic 2018 and 2019, showed data from researcher IDC.
Yang said in an interview that he expects PC demand to recover in the second half of the year.
"By the end of this quarter or early next quarter, the inventory digestion will come to an end so that the activation number and the shipment number will be more consistent".
China's cyberspace regulator said last week that Micron, the biggest US memory chipmaker, had failed its network security review and that it would block operators of key infrastructure from buying from the company.
While Lenovo sources components from Micron, Yang said the regulatory actions would not have a big impact on it.
"We have a pretty diversified supply chain. Leveraging that, we will still be able to meet our customers' requirements in all our markets," he said.
To improve profit margins, Lenovo has been expanding non-PC businesses, such as in smartphones, servers and information technology (IT) services.
For the full year through March, its non-PC businesses grew 7% and now make up about 40% of total revenue.
Overall net income attributable to shareholders fell 72% to $114 million versus analysts' $212.49 million estimate.
Lenovo shares fell 3.7% before the earnings results were released, compared with a 0.94% benchmark index drop.