Lenovo 2010 Annual Report Download - page 17

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2009/10 Annual Report Lenovo Group Limited
15
strong expense reductions during the year, totaling
US$224 million, driving the expense-to-revenue ratio
(excluding the restructuring costs and one-off items)
to a historic low of 9.6 percent, continuing the trend
of year-on-year improvement for the last four quarters.
The Group reported an operating profit (excluding the
restructuring and one-off items) of US$204 million
for the year, increase by 750 percent year-to-year.
Including a net gain of US$82 million from the disposal
of some investments and restructuring costs and one-
off items totaling US$68 million, of which including
approximately US$20 million redundancy costs incurred
in fiscal quarter four, Lenovo’s profit attributable to
equity holders amounted to US$129 million for the year,
recovering from the loss of US$226 million in the year
before.
The Group’s strong performance during the last
four quarters was the result of clarifying its strategic
priorities at the beginning of the fiscal year. The
“Protect and Attack” strategy is aimed at protecting
its core businesses in China and global commercial
business, while at the same time, attacking the
hyper-growth areas in global transactional business
in emerging markets. Lenovo also reorganized its
business by merging operations into two geographies,
namely Mature Markets and Emerging Markets. And,
to further ensure faster and stronger end-to-end
management, two product groups were created: the
Think Product Group mainly targets at commercial
customers, and the Idea Product Group mainly targets
at consumer customers.
Lenovo also took major steps to strengthen its
business model, became faster and more efficient,
and put the building blocks in place to extend its
transactional model globally, while simplifying its
relationship business to make it more productive in
focusing on the key accounts.
The Group reacquired Lenovo Mobile in November
2009 as part of its strategy to establish a leadership
position in the China mobile internet market during its
early development phase. The purchase of Lenovo
Mobile was approved by shareholders in January 2010,
resulting in the inclusion of two months of Lenovo
Protect Attack
Think/
Rel
Emerging
Market
• Focus on TM & SMB/consumer
• Primary leverage of idea portfolio
• Return to profitability
• Maintain/Grow share
China • Expand leadership position
• Improve profitability
• Go global & gain share
• Use Idea & Think
• Invest & move to profitability
TM
WW
Effective business model • Drive speed and efficiency
Innovation leadership • Premium Think
• Creative Idea
• New businesses
• Innovation efficiency
Lean cost structure • Leverage China infrastructure in TM & EM
• Meet the par with competition in Rel
“PROTECT and ATTACK” Strategy