Lenovo Buying PC Unit of Fujitsu, Profit Drops During Second Quarter

Lenovo Group announced that it had agreed to acquire a stake of 51% in the personal computer unit of Fujitsu for $269 million, after posting a profit that was lower for the quarter on continued difficulty in the worldwide PC market.

Shares of the PC maker based in China were up by 5% on the news. Lenovo along with Fujitsu first announced during October of last year they were discussing possible cooperation between their PC businesses.

Lenovo announced it would pay 17.85 billion yen or $156.7 million in cash as well as between 2.55 billion and 12.75 billion yen based upon performance up to 2020 for its stake in Fujitsu.

Earlier, Lenovo posted a $139 million profit for its second quarter that ended during September, versus a profit last year during the same period of $157 million.

A gain in taxation of more than $118 million helped Lenovo earnings to beat analyst estimates of $44 million.

Revenue at Lenovo reached $11.8 billion in comparison to last year at the same time of $11.2 billion. The global PC unit for Lenovo saw its shipments rebound by 17% from the prior quarter, though its market share for PCs during the six months that included the prior quarter fell 0.2% to just 21%, said the China based company, but did not reveal the actual shipment numbers.

Makers of PC across the globe continue to struggle as consumers shift to mobile devices. An online research company showed that worldwide shipments of PCs were down 3.6% from the third quarter one year ago, which represented the 12th straight decline.

Lenovo was dethroned as the world’s largest maker of PC earlier in 2017 by HP Inc.

The struggling mobile business for Lenovo, which it is attempting to turnaround during this current fiscal year, posted an operating loss that was narrower prior to taxes of $261 million.

Its data center unit loss increased ending the quarter at $214 million.

Lenovo warned that market conditions would continue to be challenging during the short term. However, it said that the agreement it signed with Fujitsu would make a positive impact to its worldwide business.

Lenovo shares increased by almost 3% in early Thursday trading in London, outpacing the broader market that was off by 0.2%.

Most PC makers have struggled the past four to five years as the shift to smaller, mobile electronic devices has caused the PC market to plummet.

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