The Six Five team discusses Lenovo Q4 FY23/24 earnings.
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Transcript:
Patrick Moorhead: What a banger of a quarter. I mean, I wasn’t expecting this at all. If you look at the companies that compete with Lenovo head-on, Lenovo blew it out of the water. I mean, the revenue was up almost 10%, net income was up 118%, every single business was up. non-PC revenue, 45%. That’s huge, because when people think of Lenovo, they mistakenly think of PCs only. But I understand why they do, because their number one market share. SSG services up 10%, non-PC services up 55%, that’s huge. ISG, which is a data center and edge, up 15%, that’s a quarterly record, storage and services up 52%. They had records on HPC on the edge.
I got the chance to chat with Kirk Skaugen on AI servers, and there wasn’t a whole lot of information there. But basically, 29% of the mix is AI servers. Pipeline grew 55% quarter-on-quarter to over $7 billion. Now, that’s pipeline, but not backlog. AI servers up 46%, storage attached to AI servers up 70%, and 270% growth on their leading AI server platforms, L40 and I40. And finally, they confirmed a new billion dollar customer win, doing great.
Daniel Newman: Billion dollar?
Patrick Moorhead: Yeah. Going to finalize IDG on-devices, revenue up 7%, but everybody’s down, how does that work? Apple’s down, HP’s down, Dell’s down. Crazy stuff. And a good profit margin, in fact, their profit margin is higher than Dell’s PC unit. Crazy stuff.
Daniel Newman: How about 118% in that income this quarter, Pat?
Patrick Moorhead: Well, no, I know, on the PC side. But literally, their profit margin was higher than Dell.
Daniel Newman: Anyways, Dan, credit where credit’s due, my friend. And as we wrap-up here, you hit a lot of it on the head. I mean, look, I think everybody is going to pay attention to, one, how are they doing on the diversification of their business? Lenovo was long time the PC company, that was all people really knew it for, it aggressively, ambitiously, and took a pretty big risk to go hard into infrastructure and services, and now, Pat, it’s basically seeing its non-PC revenue making up almost half of its business. That’s a big monumental pivot. And so a lot of credit due there. We’re seeing pretty strong growth across, which you kind of hit on Pat, but the solution services growth, very, very strong. The ISG growth, good on revenue, but of course, services attached to ISG growth looked very, very encouraging. I do agree with you, Pat. I think if Lenovo wants to get the full credit, and get the full love of the streets, and the full love of the market, they’re going to have to get more granularity on their AI number. Dell, right now, has stolen the day.
Patrick Moorhead: Totally.
Daniel Newman: And partially, by the way, just because the way they report things, the outsiders were able to do the backwards napkin math and basically get it out, and now that’s kind of leaked out, and everybody’s kind of seeing it, looks like Dell’s getting the lion’s share of that particular opportunity against the other OEMs. Lenovo, if you have more to say, it would be good, love to share it, especially if it’s going directionally in a way that I would expect it to be. Pat, on the IDG side, look, the smartphone growth is really interesting. I’m guessing, Pat, it was largely outside of The U.S. where that growth was coming from, but I would have to do a little bit of digging to show that. But some of those foldables and stuff, very cool designs, Pat.
Very cool, very accessible, very reasonable. I have one, I think you have one. I like it. Growing up as a Chicago boy myself, Motorola was cool. Motorola was cool, and by the way, everybody out there, Lenovo, that’s the Moto, that’s the business. That’s the one that Google bought, and then sold on, and now Lenovo has it, and they’re starting to do good things with it. So credit to Lenovo for executing its plan. This is the quarter it’s needed. It’s had a few rough ones. This is a good turn to the positive for the company. I’ll be out in Raleigh with Kirk Skaugen myself to record a Six Five session.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
