Lenovo has disclosed its earnings for the first quarter of fiscal year 2015-2016, showing a three-percent bump in revenue at $10.7 billion, but a disappointing 51 percent decrease in net income at just $105 million. The company notes that the cause for the income decline was due to "challenges in its main markets." However, Lenovo says that it faced a particularly tough situation in its mobile business due to slowing growth and increasing competition.
To address this, Lenovo says that it will take "broad, decisive actions" to reduce costs and become more profitable. One of these actions will be to more heavily rely on Motorola as the main crux behind its smartphone offerings:
Restructuring the Mobile Business Group (MBG) to align smartphone development, production and manufacturing and better leverage the complementary strengths of Lenovo and Motorola. There will be a more-simple, streamlined product portfolio, with fewer, more clearly-differentiated models. A faster, leaner business model will better leverage Lenovo's global sales force and accelerate the efficiency actions already underway in its global supply chain. MBG will continue to drive the overall mobile business, but will now rely on Motorola to design, develop and manufacture smartphone products.
This is definitely an interesting move, and should see Motorola take the lead in designing all of Lenovo's smartphone offerings. Overall, this shouldn't be much of a surprise: according to the earnings released today, Lenovo's Mobile Business Group's quarterly earnings were up 33 percent year-over-year to $2.1 billion, more than half of which came from Motorola.