Karachi(Cliff News)Lenovo Group (HKSE: 992) (ADR: LNVGY) today announced results for its first fiscal quarter ended June 30, 2016. Quarterly revenue was US$10.1 billion, a sixpercent decrease year-over-year (or four percent decrease in constant currency). Quarter-to-quarter, this represented a 10 percent increase. First quarter pre-tax income increased 297 percent year-over-year to US$206 million. Net income increased 64 percent year-over-year to US$173 million.Lenovo’s first quarter financial performance occurred during a period when the core markets saw either slow growth or year-over-year industry declines: PCs were down 4.1 percent and tablet shipments fell 11.1 percent, while server industry shipments were essentially flat with smartphone markets growing 0.7 percent. At the same time, the RMB continued its depreciation, capping overallgrowth potential during the quarter.“Although the macro-economy and our industries remain challenging, causing a decline in our revenue, we significantly improved our profit year-on-year through innovative products and strong execution. Our PC business delivered strong profits and our smartphone business stabilized compared to last quarter,” said Yuanqing Yang, Chairman and CEO of Lenovo. “Going forward, in PCs we will focus on high growth segments and leverage industry consolidation to resume growth. In smartphones, we will leverage innovative, differentiated products and continue to shift to higher price bands to drive growth and turn around this business. In data centers, we will continue to expand in hyperconverged technology, and improve profitability in the hyperscale business.”The Company’s gross profit for the first fiscal quarter decreased 7percent year-over-year to US$1.5 billion, with gross margin at 15.3 percent. Operating PTI for the quarter increased97 percent year-over-year to US$281 million. Basic earnings per share for the first fiscal quarter was 1.57 US cents, or 12.19 HK cents. Net debt as of June 30, 2016, totaled US$1.2 billion.In the PCand Smart Device Business Group, or PCSD, which includes PCs and tablets, Lenovo’s quarterly sales were US$7 billion, down seven percent year-over-year. Pre-tax income was US$370 million,an increase of2.4 percent year-over-year. Pre-tax income margin was strong at 5.3 percent, improving 0.5 points year-over-year, aided by good margins in China and increased profitability of the Latin America and Brazil PC businesses. Lenovo remained #1 worldwide for the 13thconsecutive quarter with 21.1percent market share, withgains in every geography except EMEA. It shipped 13.2 million PCs in the quarter, a 2.3 percent decline, which representeda 1.8 point premium to the overall market, which saw a 4.1 percent decline. The tablet business was profitable with a double-digit growth premium to market. Lenovo continues to make steady progress towards its goal ofachieving 30 percent worldwide PC market share.In the Mobile Business Group, or MBG, which includes products from Motorola and Lenovo-branded mobile phones, Lenovo quarterly sales were US$1.7billion, down6 percent year-over-year, but nearly flat in constant currency. MBG’s total pre-tax loss was US$206 million, with a pre-tax profit margin of negative 12.1 percent. The transition to higher priced productsdrove pre-tax profit margin up2.9 points year-over-year.In mainstream price bands, MBG is streamlining costs and expenses,while at the high end it is focusing on innovation. Overall, the group is strengthening its cohesiveness and building a more consistent culture within its global team. With the enhanced product portfolio that includes Moto Z and Moto Mods and further expanding channels in China, the Mobile business is making steady progress.In the Data Center Business Group, or DCG, which includes servers, storage, software and services sold under both the Lenovo ThinkServer and the System x brands, sales were US$1.1 billion, up 1 percent. DCG’s reported PTI – which included non-cash, M&A-related accounting charges – was negative US$64 million with a pre-tax profit margin of negative 5.9 percent. DCG continues to face stiff challenges in mature markets, but it strengthened its #1 market share position in China,increasingrevenue 14 percent year-over-year, driven by growth in the hyperscale business. DCG’s global accounts sales group, which services Fortune 500 clients, saw a 45 percent year-over-year increase in revenue, driven by a significant increase in customers who had not previously purchased from Lenovo.DCG will deploy strategic investments in sales force capabilities, marketing, channel programs and portfolio partners to drive future growth opportunities, while improving its financial footing with better cost competitiveness and an increased attach rate of storage, networking, services and options.