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Lenovo Announces 2004/05 Annual Results.



HONG KONG Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov.  -- Lenovo Group Lenovo Group Limited, (HKSE: 0992 ) is today the fourth largest personal computer manufacturer in the world, and the largest in the Asia-Pacific region as of 2006. "Lenovo" is a portmanteau of "Le-" (from Legend) and "novo", pseudo-Latin for "new.  Limited

--Profit Attributable to Shareholders Grew 6.4 Percent to HK$1.120 Billion

--Integration of Former IBM PC A PC made by IBM. IBM created the PC industry in 1981 when it introduced its first model with 16KB of RAM. However, it was way off in its estimates, projecting that 250,000 units would be sold in the first five years. In fact, about three million IBM PCs were sold in that period.  Business Proceeding Smoothly

--New Products and Customer-Focused Initiatives Providing Momentum

Lenovo Group Limited (HKSE HKSE Hong Kong Stock Exchange :992; ADR ADR - Astra Digital Radio : LNVGY) today announced its annual results for the period ended March 31, 2005.

In the 2004/05 fiscal year, Lenovo's profit attributable to shareholders increased by 6.4 percent to HK$1.120 billion. Excluding our investments in globalization globalization

Process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. Factors that have contributed to globalization include increasingly sophisticated communications and transportation
 -- the amortization of marketing rights for The Olympic Partner Program -- profit attributable to shareholders increased by 9.4 percent to HK$1.152 billion. Lenovo reported basic earnings per share increased 6.4 percent to 14.99 Hong Kong cents. Lenovo's board of directors has proposed a final dividend of 2.8 HK cents per share Cents per share

The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned.
.

Consolidated turnover for the 2004/05 fiscal year decreased slightly by 2.7 percent to HK$22.55 billion, primarily as a result of the Group's divestiture of non-core businesses. Excluding the impact of divestiture of non-core businesses, group turnover increased by 1.6 percent for the full year. . By successfully implementing the strategic initiatives set in the beginning of the year and focusing on its core PC and related products business, Lenovo strengthened its leadership position in the China PC market. During the period, Lenovo's overall gross margin increased to 14.75 percent from 14.62 percent in the prior year.

"The 2004/05 fiscal year was remarkable for Lenovo," said Yuanqing Yang, chairman of Lenovo. "Over the year, we saw the tangible benefits of focusing on our core business segments in the PC market. We strategically adjusted our product line to capture the township and notebook markets in China - both segments with high-volume growth potential - and we built a comprehensive customer-oriented sales model to serve our customers better. We accomplished all of this while planning our acquisition and beginning our integration of IBM's Personal Computing Refers to users working on their own computers rather than a terminal to a mainframe. Sometimes, the term refers to using computers at home for work and/or entertainment in contrast to business use only. See personal computer.  Division."

Steve Ward Steve Ward previously served as the Chief Executive Officer of Lenovo. For 26 years Ward managed a number of key products and divisions before being appointed Chief Information Officer of IBM's Personal Computer Division. , Lenovo's chief executive officer said, "It is especially gratifying grat·i·fy  
tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies
1. To please or satisfy: His achievement gratified his father. See Synonyms at please.

2.
 to note that our team at Lenovo-China continued to delight customers and increase both gross margin and market share while completing the acquisition of IBM's Personal Computing Division. Working together to successfully integrate the two businesses has only sharpened our focus on customers, on delivering innovative products and executing efficiently."

Corporate IT Business

Total turnover for Lenovo's corporate IT business grew by 2.5 percent to HK$12,226 million. During the year, Lenovo's commercial desktop market share increased as a result of redesigning its sales model and introducing tailor-made innovative desktop and notebook products. Lenovo's Corporate IT business also benefited from increased investment by the government and education sectors, the rapid growth of small- and medium-sized enterprises, and significant demand for notebook computing. To take advantage of the increasing demand for notebook computers in China, the Group introduced three distinctive notebook series - Soleil, Tianyi and Xuri - setting trends with innovative features.

Consumer IT Business

Lenovo's turnover in its consumer IT business remained approximately even with the prior fiscal year at HK$7,768 million. During the year Lenovo implemented an effective customer segmentation strategy and captured the growth potential in the township markets with its Yuanmeng desktop series. In addition, Lenovo introduced high-end models such as the Tianjiao broadband collaborating desktops, which allow better utilization of broadband technology broadband technology

Telecommunications devices, lines, or technologies that allow communication over a wide band of frequencies, and especially over a range of frequencies divided into multiple independent channels for the simultaneous transmission of different signals.
, including videophone (1) (VideoPhone) A line of videophones (definition #1 below) from AT&T that were introduced in the early 1990s and later pulled off the market due to poor sales. The first models came with a price tag above $1,000, and a pair were needed. See Picturephone.  modules.

Mobile Handset Business

Turnover in Lenovo's handheld device business increased by 7.5 percent to HK$2,203 million. For the past two years, the Group has been building its sales channels and enhancing its R&D capabilities. In the 2004/05 fiscal year, Lenovo's mobile handset unit shipments jumped 63 percent, placing it among the top five domestic brand names in China in 2004.

Acquisition of the IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries)  Personal Computing Division

On May 1, 2005, Lenovo completed its acquisition of IBM's Personal Computing Division, creating the third-largest PC company in the world. The new Lenovo is a global company with 19,000 employees, approximately 14 million units in annual volume and combined annual PC revenue of approximately US$13 billion (based on 2003 combined revenue for each company).

"In our first 30 days as a new company, we have already made substantial achievements, " said Mr. Ward. "We have announced the innovative ThinkPad X41 Tablet, one of lightest convertible tablets available, featuring best-in-class battery life. We introduced the new ThinkCentre M52 and A52 desktops, with dual-core processors. We announced plans to establish an innovation center in the U.S. with five industry leaders - Intel, Microsoft, LANDesk, Symantec and IBM - that will enable customers, business partners and ISVs to collaborate on new personal computing solutions.

"We also held our first Lenovo PartnerWorld in China and introduced 18 new notebook computers and consumer PCs. And last week, we announced an agreement with NBC NBC
 in full National Broadcasting Co.

Major U.S. commercial broadcasting company. It was formed in 1926 by RCA Corp., General Electric Co. (GE), and Westinghouse and was the first U.S. company to operate a broadcast network.
 to be its computer equipment provider and support the network's coverage of the 2006 Olympic Winter Games in Torino, Italy," Mr. Ward said.

About Lenovo Group Ltd.

Lenovo (HKSE: 992; ADR: LNVGY) is the world's third-largest personal computing company. Formed by Lenovo Group's acquisition of the former IBM Personal Computing Division, the company employs 19,000 people worldwide and develops, manufactures, and markets reliable, secure, and easy-to-use technology products. For more information, see www.lenovo.com.
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Publication:Business Wire
Date:Jun 8, 2005
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