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

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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.

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

1. Stabilize the Business

2. Build global culture

3. Execute growth strategy

Post-Merger Integration: 3 Stages

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

• 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

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.”

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 & 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

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


YTY (pts)


“Lenovo's sales surge in China and emerging markets”-- BusinessWeek

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


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


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

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

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

• BALANCED strategy

• BALANCED performance

• BALANCED business model

• BALANCE of core and new businesses

• BALANCED short and long term thinking

Leadership is About Balance

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

THANK YOU

For more information about Lenovo, please contact our IR team:

Gary Ng: [email protected]

William Li: [email protected]

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