Lenovo posts surprising loss due to charge related to US tax reform

Lenovo Group Ltd, which lost its leading position in the world’s PC market to HP in 2017, posted a surprising loss of US$289 million in the quarter ended in December, the company said today.

Lenovo attributed the loss to a one-time tax charge of about US$400 million related to the US tax reform. But the Trump administration’s tax reform may see the company pay a lower tax rate for its US operations “in the longer term”, market observers said.

In the quarter ended on December 31, Lenovo's loss came to US$289 million, compared with a profit forecast of  between US$124.5 million and US$128 million based on analysts’ estimates. A year ago, Lenovo posted a net profit of  US$98 million.

The company's revenue totaled US$13 billion in the quarter, up 6 percent from a year ago.

The global market for personal computers grew slightly during the quarter amid sluggish demand. Hewlett-Packard has overtaken Lenovo as the world’s No. 1 PC maker, according to International Data Corp, a US-based IT research firm.

Lenovo’s surprising loss sends a warning to Chinese firms which generate a huge income from the US market, industry insiders said. The US tax reform and related policies have brought uncertainty and risk for them, they said.