Lenovo Corporate Presentation · ©2010 Lenovo Lenovo Corporate Presentation 2010 CitiGlobal...
Transcript of Lenovo Corporate Presentation · ©2010 Lenovo Lenovo Corporate Presentation 2010 CitiGlobal...
© 2010 Lenovo
Lenovo Corporate Presentation
2010 Citi Global Technology Conference
Rory Read, President and COO
Page 2 of 23
Forward-Looking Statements
Statements about future results or events, including statements about Lenovo’s
anticipated financial and operating performance and goals, and all other statements
that are not purely historical, are forward-looking statements based on Lenovo’s
current expectations. Actual results in the future may differ materially from those
indicated by these forward-looking statements due to a wide variety of risks and
uncertainties including, but not limited to, general economic and business
conditions, competition and pricing pressures in the technology industry, labor
conditions, political instability, unexpected regulatory changes, trade protection
measures, changes in tax and other laws, foreign currency exchange rates, the
ability to predict and plan for future demand, dependence on certain single-source
supplier relationships, and the effect of terrorism, natural disasters, and public
health issues. In addition, any forward-looking statements represent our estimates
only as of the date of this presentation and should not be relied upon as
representing our estimates as of any subsequent date. While we may elect to update
forward-looking statements at some point in the future, we specifically disclaim any
obligation to do so, even if our estimates change.
Page 3
The Beginning: A New Idea
• 1981: IBM introduces the PC
• 1984: Lenovo is founded in China
– 11 founding engineers
– US$25,000 seed money
• Today:
– $17+ billion in revenue– 21,000+ employees in 60+
countries– Customers in 200 + countries
Page 4
1. Stabilize the Business
2. Build global culture
3. Execute growth strategy
Post-Merger Integration: 3 Stages
Page 5
Foundation of Lenovo’s Business
• Lenovo heavily weighted in China and WW Commercial markets
• Global economic crisis hit in the second half of FY2008/09– Significantly affected commercial PC demand
– Growth of China PC market slowed down
• Lenovo’s financial performance in FY2008/09 significantly affected by:– Widespread economic crisis, slower PC shipment growth
– Steeper-than-normal decline in ASP
– Aggressive pricing and currency fluctuations
– Restructuring charges of US$146M to enhance operational efficiency
Page 6
• Protect & Attack strategy aligned with our dual engines:
– Protect: China / Mature Relationship; Attack: Emerging / Mature Transactional
– Profit Engine: Think & Relationship; Growth Engine: Idea & Transactional
We have the Right Strategy
Page 7
Historic Market Share Breakthrough, Continued Strong Momentum
• WW share: 10.2% Share; up 1.9 points YTY
– Nearly 3 years ahead of schedule
• Fastest growing major PC company for 3 straight quarters
– More than 2x market AGAIN
• Improved profitability: PTI of US$76 million, up US$77 million YTY
• Lowest E/R since acquisition: 8.6%, drop of 2 points YTY
“Lenovo makes up ground on PC rivals.”
Page 8
Protect China Leadership
• Strengthened China leadership
– Grew 43% YTY, gained 2.4 points market share YTY
– Widened gap with competition
• Improved Segment Operating Profit by US$33 million YTY
Source: IDC Source: IDC
-10
0
10
20
30
40
50
60
31%
43%
China Market YTY Growth
Lenovo China YTY Growth
China Market & Lenovo China
PC Shipment YTY Growth (%)
FY09/10 FY10/11
4Q3Q2Q
FY08/09
1Q 4Q3Q2Q 1Q-10
0
10
20
30
40
50
60
-10
0
10
20
30
40
50
60
31%
43%
31%
43%
China Market YTY Growth
Lenovo China YTY Growth
China Market YTY Growth
Lenovo China YTY Growth
China Market & Lenovo China
PC Shipment YTY Growth (%)
FY09/10 FY10/11
4Q3Q2Q
FY08/09
1Q 4Q3Q2Q 1Q
FY09/10 FY10/11
4Q3Q2Q
FY08/09
1Q 4Q3Q2Q 1Q 0%
10%
20%
30%
0%
10%
20%
30%
Q208/09
Q308/09
Q4
08/09
Q209/10
Q3
09/10
Q409/10
Q1
09/10
Q1
10/11
28.7%
9.0%
8.2%
HP
Dell
Lenovo China Market Share Vs. Major Peers
Q208/09
Q308/09
Q4
08/09
Q209/10
Q3
09/10
Q409/10
Q1
09/10
Q1
10/11
28.7%
9.0%
8.2%
HP
Dell
28.7%
9.0%
8.2%
HP
Dell
China Segment Operating Profit (US$M)*
50
25
0
75
100
150
57
95
105
135
108
125 138
108
Q1
09/10
Q4
08/09Q2
09/10
Q3
09/10Q4
09/10
Q1
10/11
Q1
09/10
Q4
08/09Q2
09/10
Q3
09/10Q4
09/10
Q1
10/11
* Excluded one-off item/restructuring cost
“Lenovo turns in profit on rise in PC shipments”– The Wall Street Journal
Page 9
Attack Emerging Markets
• Achieved rapid growth
– Volume grew 69% YTY, gained 1.4 points market share YTY
– Increased market share in all key emerging markets
• Improved Segment Operating Profit by US$7 million YTY
(25)
0
25
50
75
100
Market
Q308/09
Q309/10
Q209/10
Q109/10
Q408/09
Q208/09
Q409/10
Q1
10/11
69%
26%
EM Shipment YTY Growth (%)
(25)
0
25
50
75
100
Market
Q308/09
Q309/10
Q209/10
Q109/10
Q408/09
Q208/09
Q409/10
Q1
10/11
69%
26%
Source: IDC
Lenovo Emerging Markets Segment Operating Profit (US$M)
(40)
(20)
0
20
-6
-20
-32
Lenovo Emerging Markets Segment Operating Profit (US$M) *
(80)
(60)
0
20
-25
-67
-39
Q109/10
Q408/09
Q209/10
Q309/10
Q409/10
Q110/11
Q109/10
Q408/09
Q209/10
Q309/10
Q409/10
Q110/11
Q109/10
Q408/09
Q209/10
Q309/10
Q409/10
Q110/11
EM Region Share and Share Growth
Total
HTK
LA
ASEAN
Russia
India
EMAT 4.6%
4.3%
5.8%
7.2%
6.5%
6.2%
5.4% +1.4
+1.1
+1.1
+3.9
+2.1
+0.4
+1.0
Q1 SharesShare Gains
YTY (pts)
Source: IDC
EM Region Share and Share Growth
Total
HTK
LA
ASEAN
Russia
India
EMAT 4.6%
4.3%
5.8%
7.2%
6.2%
5.4% +1.4
+1.1
+1.1
+2.1
+0.4
+1.0
Q1 SharesShare Gains
YTY (pts)
* Excluded one-off item/restructuring cost
“Lenovo's sales surge in China and emerging markets”-- BusinessWeek
Page 10
Mature Markets: Protect Relationship, Attack Transactional
• Mature Market volume grew 49% YTY, gained 1.3 points market share YTY
– Relationship volume grew 30% YTY, twice as fast as market
– Transactional volume grew 60% YTY, 4 times as fast as market
• Achieved break-even for first time since economic downturn
Mature Market YTY Growth (%)
Market
49%
0
25
50
15%
WE
Japan
MM Region Share and Share Growth
Total
NA
ANZ
5.1%
6.3%
5.5%
5.6% +1.3
+0.7
+1.6
+2.0
+3.5
Q1 SharesShare Gains
YTY (pts)
9.6%
Lenovo Mature Markets Segment
Operating Profit (US$M)
(30)
(20)
(10)
-15
-37
0
-6
0
10
-37
-7
Lenovo Mature Markets Segment
Operating Profit (US$M) *
“As economy picks up, Lenovo revs up engine…”-- Manilla Bulletin
Source: IDCSource: IDC
Q308/09
Q309/10
Q209/10
Q109/10
Q408/09
Q409/10
Q110/11
(25)(40)
Q109/10
Q408/09
Q209/10
Q309/10
Q409/10
Q110/11
Q109/10
Q408/09
Q209/10
Q309/10
Q409/10
Q110/11
Q109/10
Q408/09
Q209/10
Q309/1
Q409/10
Q110/11
* Excluded one-off item/restructuring cost
Page 11
Capture Growth Opportunities in Mobile Internet
• LePhone launch successful; reached 12% share of premium internet phone market
Source: SINO, excluded Symbian O/S
>¥¥¥¥2000 3G Mobile Internet Phone Market Share
46%
35%
27%29%
33%
26%
12%
7%0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
201001 201002 201003 201004 201005 201006
Apple Motorola HTC
SamsunG Coolpad Lenovo
“Our performance was strong globally, Lenovo has a clear strategy when and where
to focus on gaining share, and when and where to focus on maximizing profit.”
-- Chairman Liu in AP story
Page 12
Expanded Innovative Product Portfolio
• Industry-leading products continue to win awards
• Lenovo’s innovation continues to be efficient and customer-driven
IdeaCentre Q100 Nettop“ThinkPads have a well-earned
reputation for rugged construction and great keyboards, and the T400s does not disappoint on either score. I have the sense that an elephant could dance on the lid without causing damage.”
ThinkPad T400s
IdeaCentre Q700 Home Theatre
IdeaCentreD400 Home Server
Lenovo A600: Best All-in-One
IdeaCentre A600 AIO
Page 13
Building Strong and Long-term Foundation for Growth
• Investing in our competitiveness
– Further invest in innovation, improve innovation capability
– Refine business model, maximize value and efficiency
– Increase branding efforts, raise brand recognition
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• BALANCED strategy
• BALANCED performance
• BALANCED business model
• BALANCE of core and new businesses
• BALANCED short and long term thinking
Leadership is About Balance
Page 15
Outlook
• Facing challenges:
– China market experiencing slight slowdown
– Mature Markets’ demands not fully recovered
• Capturing opportunities:
– Commercial replacement demand improving gradually
– Emerging Markets offer growth opportunities
– Strategy in place to seize opportunity presented by mobile internet
Drive Faster
Than Market Growth
Page 16
THANK YOU
For more information about Lenovo, please contact our IR team:
Gary Ng: [email protected]
William Li: [email protected]