After three quarters of losses, Lenovo has turned a profit again. The computer maker announced Thursday that its fiscal second-quarter earnings more than doubled to $53 million versus $23 million a year ago.
Profit for the quarter ended September blew way past estimates of only $24 million from analysts surveyed by Bloomberg.
Despite a 5.2 percent sales decline to $4.1 billion from $4.3 billion in the year-ago quarter, Lenovo achieved its profits through extensive cost cuts and a record leap in market share.
(Credit:
Lenovo)
The company had previously kick-started a major restructuring program designed to trim expenses and streamline business operations. As a result, Lenovo was forced to lay off a sizable number of employees and take a one-time restructuring charge of $3 million in the second quarter. But the company now expects to save around $300 million annually.
During the quarter, Lenovo says it also saw its worldwide PC shipments surge 17 percent over the prior year, dramatically outpacing the industry average of only 2.3 percent.
"In the last quarter, our share in the global market climbed to a historic high and we returned to profit," said Lenovo CEO Yang Yuanqing in a statement. "At the same time, our expenses-to-revenue ratio improved notably, reaching the best level since the acquisition of IBM's PC division. These achievements bear witness to the clear strategies we set at the beginning of the year and our effective execution of those strategies."
Lenovo's quarterly results were powered by its notebooks, which contributed 63 percent to overall revenue. Though notebook sales dipped 1 percent from the prior year, shipments shot up 37 percent, compared with an industry average of 16 percent.
During the quarter, the company unveiled a few new products, including the IdeaPad U450p, a thin and light consumer laptop, and SimpleTap, an application to help users navigate the touchscreens on Windows 7-enabled machines like the ThinkPad X200 Tablet and ThinkPad T400s.
Desktop sales, however, fell 13 percent from the prior year's quarter, kicking in only 35 percent to Lenovo's overall revenue. Desktop shipments fell 2 percent, but outpaced the industry average of a 12 percent decline. The company said it has reacted to the PC market shift from desktops to laptops by introducing new entry-level low-cost desktops and revamping its product line for small and medium-sized businesses.
Lenovo enjoyed a stellar second quarter in its home base of China where sales jumped 9 percent to $2 billion. Shipments in the country jumped 28 percent compared with the average of only 0.1 percent. Already the leading PC vendor in China, the company boosted its market share there to 29.4 percent.
Earlier this year, Lenovo said that it would refocus its efforts on China and other emerging markets, a strategy that appears to have paid off.
"Our results are moving in the right direction and we are particularly pleased with our performance in China and in the transactional business model," said Lenovo Chairman Liu Chuanzhi in a statement.
The year had been a volatile one for Lenovo. The company was hit a string of quarterly losses, leading to the resignation of President and CEO William Amelio in February. Job cuts and the restructuring also took their toll.
But based on its second quarter, Lenovo is optimistic about the near term.
"In the coming quarters, we will continue to reinforce our leadership in China, improve the sustainability and profitability of mature markets, seize growth opportunities in emerging markets and our transactional business, continue to strengthen cost structure, and innovate with raising efficiency and customers' needs in mind," said Chuanzhi.
Networking giant Cisco Systems announced another acquisition this week. This time the company said it will buy the set-top division of a Chinese digital cable technology company.
Late Monday, Cisco said it would pay a total of about $44.5 million for the set-top unit of DVN. It will pay $17.5 million upfront, and the remaining $27 million will be paid over four years, based on the unit achieving sales milestones.
The deal is expected to close in the first half of next year, and it is subject to the approval of regulators and DVN shareholders.
Cisco is also partnering with the rest of DVN to provide joint customers with expanded services.
The DVN unit being acquired makes products that connect digital signals to televisions. Cisco already makes and sells set-top boxes for customers around the world through its Scientific Atlanta division.
Cisco sees a big opportunity in the Chinese cable market, which it says is the largest in the world with 160 million subscribers and with an additional 200 million subscribers expected to become customers in the next few years.
China is in the process of moving its cable subscribers to digital. The government has mandated that all cable be digital by 2015, Cisco said. Today only about a third of Chinese cable customers are using digital cable.
This is the fourth acquisition that Cisco has announced since the beginning of October. The company has spent about $6.2 billion in total during this shopping spree.
Finally, it seems the Chinese people are about to be able to legally get their hands on the phone they have been building: the iPhone.
According to International Business Times, Unicom, China's second largest cell carrier, has paid 10 billion yuan (about $1.46 billion) to buy 5 million iPhones from Apple. The first batch of the phones will be made available to Chinese customers as early as next month. Since March, the company has been posting the phone's images and specs at its stores.
Like almost everything nowadays, the iPhone is also from China.
(Credit: Dong Ngo/CNET)This will be the first time the phone is legally available in the country with the largest amount of cell phone users in the world. I find this sort of ironic, as, like most electronic devices, the iPhone is assembled in China.
The Chinese people are already acquainted with the iPhone. Prior to this, the phone has been available in China, as well as Vietnam and many other countries where Apple has no business partners, via smuggling.
What will be new to the Chinese people for sure, however, is the fact that the phone will be locked to Unicom. Yu Zaonan, general manager of the customer development department of China Unicom in Guangzhou, told International Business Times that China Unicom is hoping 5 million iPhones will translate into 5 million new customers for the company. Unicom currently is still far behind China Mobile, the largest cell carrier in the country, both in terms of subscribers and profit. Unicom hopes the iPhone will help it narrow this gap.
Locked phones are generally new to China and Asia, where people have had the freedom of getting any phone at any store and using it with any carrier. This deal between Apple and Unicom means they will get a taste of business the American way.
It's unclear which versions of the iPhone (3G or 3GS) are included in this deal and whether the phones will have Wi-Fi disabled. However, according to Yu Zaonan, the price for the 8GB iPhone will be 2,400 yuan ($350) and the 16GB version will cost twice as much. This means the company's hopeful new batch of 5 million subscribers will be those with substantially high incomes.
Anyone not so well-off might just have to resort to used and jailbroken iPhones smuggled in from other countries. These phones cost somewhere between 400 yuan ($59) and 1,000 yuan ($146), according to International Business Times.
Personally, I think it's likely many of those 5 million iPhones will be jailbroken by the locals. Now, if Apple's claim that jailbreaking the phone can turn it into a weapon of mass disruption was true, this could be unsettling news for communist China.
Google has acknowledged that the Chinese government asked it to disable a search feature with the goal of censoring pornography, but it still won't say whether the government ordered tighter censorship around the 20th anniversary of the Tiananmen Square massacre.
The New York Times reported Friday that Chinese government officials ordered Google to remove the search feature--known as Google Suggest--that displays related search terms based on the original query typed into the search bar or face unspecified punishment. Apparently some queries brought up related results with suggestive implications, leading to criticism from China's state-run media and government officials prior to Friday's move.
Google has long faced a difficult dilemma in China, reconciling the Chinese government's insistence that Internet companies censor their products with the company's desire to improve the world's access to information; not to mention the demands of shareholders for profits.
But despite acknowledging direct government intervention over pornography, Google is still unwilling to say whether or not the Chinese government ordered a temporary muzzle on its search engine around June 4, the 20th anniversary of the Chinese government's violent crackdown on student protesters in Tiananmen Square.
For several days, Google.cn blocked all results for searches on Tiananmen Square, including ones that were entirely unrelated to the events of that day in 1989. Those results, such as travel-related sites, were restored last week.
In this case, however, Google was quite willing to state that it met with Chinese government officials to "discuss problems with the Google.cn service and its serving of pornographic images and content based on foreign language searches," a Google representative said in a statement.
The company is also putting some serious effort into making sure it complies with China's antipornography drive. "We are undertaking a thorough review of our service and taking all necessary steps to fix any problems with our results. This has been a substantial engineering effort, and we believe we have addressed the large majority of the problem results," Google said.
Just in case those efforts don't work, China still plans to require PC companies to install desktop monitoring software later this year, according to a separate report in The New York Times debunking claims earlier in the week that China was reconsidering the requirement in the wake of security problems with its Green Dam software.
On June 4, 2009, Google.cn blocked all searches for "Tiananmen Square," even ones not related to the massacre that took place on that date in 1989. It refuses to say why.
(Credit: Screenshot by Tom Krazit/CNET)
Google was going to help democratize data in China. Instead, about three years after entering the Middle Kingdom, the search company still finds itself in an uncomfortable working relationship with government censors.
For about eight days between June 3 and June 11, Google.cn blocked all results that might come from searches for Beijing's Tiananmen Square. Not just politically sensitive results, not just historical accounts of the hundreds of deaths on June 4, 1989, but every single result--including directions to the square--with an error message that read "Search results can not be displayed as they may contain contents that do not comply to related laws and policy."
As of Thursday, things had appeared to return to normal. A search for "Tiananmen Square" in either English or Chinese brought up links to shops in the area, historical documents about one of China's most storied places, and images of fun, happy times in downtown Beijing.
So how did Google know that it was supposed to drop the hammer on all results for Tiananmen Square for that brief period of time? And how did it know that it was once again safe to reapply the limited filter?
Google isn't saying, beyond pointing to previous interviews and statements it has given on its tricky balancing act in China. "Google.cn complies with Chinese laws. The differences in search results over time in China are the result of a variety of factors, including the content that is available on the Internet and the regulations we follow in China," the company said in a statement last week.
But it has confirmed that Google has dropped a previous method of determining how to self-censor its search results--pinging the so-called Great Firewall of China to see what sites are blocked--in favor of a new self-censorship method that the company refuses to disclose.
Difficult choices
Google's formal entry into China in 2006 with Google.cn forced the company to strike a difficult balance between its stated goal of making the world's information widely available and the requirement that all Internet companies doing business in China adhere to government regulations regarding censorship.
In some ways, Google has improved the flow of information in China. Upon entering the market, it made sure to include a disclaimer like the one above alongside search results for sensitive queries, something even Baidu does now. That decision allowed Chinese Internet searchers to know they weren't getting the full extent of what was available on the Internet for a given query.
In addition, a study published by the University of Toronto's Citizen Lab in June 2008 found that Google is actually the least censored search engine in China. Google is the second-most widely used search engine in China, behind Baidu.
In the past, company executives have justified Google's censored presence in China with a glass-three-quarters-full analogy: it's better to offer Chinese Internet users access to a wealth of information they might be otherwise unable to find at the expense of "pulling a few books out of the library," so to speak. They are also, of course, unwilling to miss out on perhaps the greatest Internet land rush of the 21st century as China's massive population continues to come online.
However, determining which books to leave and which books to pull is not an easy task. Google representatives over the past week pointed repeatedly to an article in "The New York Times" from 2006 that described Google's methodology for making those tough choices.
From the article:
Brin's team had one more challenge to confront: how to determine which sites to block? The Chinese government wouldn't give them a list. So Google's engineers hit on a high-tech solution. They set up a computer inside China and programmed it to try to access Web sites outside the country, one after another. If a site was blocked by the firewall, it meant the government regarded it as illicit -- so it became part of Google's blacklist.
That system is no longer in place, Google representatives confirmed. Despite repeated inquiries, no information was made available about the new system: whether it involves taking direct cues from the government, self-selection by Google engineers, or something else.
In a way, Google's reluctance to talk about censorship and China is understandable. The Chinese government's regulations seem to be written in a deliberately vague way as to encourage Internet companies to censor more than the government would actually like to see pulled from the Internet.
In 2006, CNET's Declan McCullagh noted that Google.cn censored far more search results than seemed necessary, which was proven when Google restored access to Web sites like Budweiser.com following the article, with no apparent repercussions from the Chinese government.
The Times article from 2006 also noted the existence of weekly meetings between government officials and Internet companies known as the "wind-blowing" meetings; as in, you don't need a weatherman to know which way the wind blows in China, you need a bureaucrat. During those meetings, government officials would discuss upcoming events and hint at the ones they'd prefer to go unnoticed, according to the article.
Relevance lost
Ahead of the 20th anniversary of the massacre in Tiananmen Square, it seems several such meetings took place. Web sites across China were forced to shut down for a brief period of time in the days surrounding June 4, which many of them sarcastically dubbed "Chinese Internet Maintenance Day."
Unlike Twitter, Google's YouTube, and Wordpress, Google.cn was not shut down during the days surrounding the anniversary. But it was certainly far more stingy with search results than it was before the first week of June, or at present.
Whatever filter Google is using is both flexible and imprecise. Searches for obvious terms like "Tiananmen Square" and "Tank Man" returned no results between approximately June 3 and June 10, but as of last Thursday once again returned generic results unrelated to the events of June 4, 1989.
However, during "Chinese Internet Maintenance Week," searches on Google.cn for "June 4 incident" (the Chinese term for the events of June 4, 1989), "Goddess of Democracy" and "Tiananmen Square massacre," all returned results that one might think would be frowned upon by the Chinese government, including images of the Goddess of Democracy--a Statue of Liberty-like figure constructed by student protesters--staring defiantly at a portrait of Chairman Mao above the Tiananmen Gate.
Google's new filtering method allows Google.cn searches in English to produce results the government might not like. The same search in Chinese does not lead to Wikipedia.
(Credit: Screenshot by Tom Krazit/CNET)And during that week, a search for "June 4 incident" on Google.cn actually returned (and still does return) links pointing to Wikipedia's article on the subject as well as a YouTube video with bloody images of the government's crackdown on student protesters in the top two positions. A search for that term in Chinese returns what appears to be censored results with the "According to local laws and regulations and policies, some search results are not displayed" disclaimer.
Perhaps that's why the Chinese government has announced plans to require all PCs sold in the country to have filtering software preinstalled that would block Web sites and even monitor keystrokes in word-processing applications. Whatever new filtering method Google has chosen, it may not be enough to satisfy the government's desire to keep certain topics out of the public eye.
Google has justified its presence in China as part of its lofty mission; this is a company that really does think it's engaged in business to better the world. But doing business in China while maintaining the moral high ground could well be more difficult than digitizing all the world's information.
China's government plans to require all PCs sold in that country as of July 1 to be shipped with software that blocks certain Web sites, according to a report in The Wall Street Journal.
The move, which is expected to give government censors heightened control over how China's citizens use the Internet, is intended to protect young people from "harmful" content such as pornography, according to the software's main developer.
The software, called "Green Dam-Youth Escort," would block access to banned Web sites by connecting to a regularly updated database of banned sites and block access to those addresses, according to the report. The requirement is aimed at "constructing a green, healthy, and harmonious Internet environment, and preventing harmful information on the Internet from influencing and poisoning young people," according to a May 19 Chinese government notice the newspaper cited.
The Chinese government has a reputation for restricting its citizens' access to the Internet.
Last week, on the 20th anniversary of the Tiananmen Square massacre, China reportedly blocked access to Web sites like Twitter, Yahoo's Flickr, YouTube, Microsoft Hotmail, Live.com, Wordpress, Blogger, and many other social-networking sites.
Internet censorship in China took center stage last year during the Beijing Olympic Games when it was revealed that the International Olympic Committee had cut a deal to let the Chinese government block international journalist' access to sensitive Web sites, despite promises of unrestricted access.
The Chinese government has apparently moved to block YouTube once again.
The Wall Street Journal is reporting that the government began blocking the site slowly over the past 24 hours. Quoting a Google spokesman, the Journal reported that the company has not been given a reason for the ban.
A Chinese official was asked about the ban during a press conference on Tuesday and said the "Chinese government has taken up management of the network according to the laws," the Journal reported.
"YouTube has been blocked in China," Google said in a statement. "We don't know the reason for the blockage, and we're working to restore access to our users in China."
By now, YouTube and parent company Google should be expert at handling international crises. Iran, Pakistan, Turkey, and Thailand are among the countries that have cut off access to the Web's largest video site. Most of the countries have eventually brought it back.
A year ago, China blocked YouTube in an apparent attempt to prevent the outside world from anti-government protesters clashing with police inside Tibet. China eventually unblocked YouTube.
A man cheats on his wife and after learning of the affair the woman leaps from her 24th-floor balcony. Before committing suicide, the wife blames her husband and his mistress for her death in a blog post.
The woman was a 31-year-old Beijing resident who has since become the face of what the Chinese call "human flesh search engines." The term is used to describe cybermobs banding together online to hunt down people who have committed perceived wrongdoings.
There's a fascinating story about these Web vigilantes from Beijing-based freelance journalist Chris O'Brien at Forbes.com. He writes that after becoming the target of a human flesh search engine, Wang Fei, the suicide victim's husband, was disgraced, lost his job, and was physically threatened.
No trial, no jury.
"Within days, photographs of Wang appeared on numerous Internet forums alongside his phone numbers, address, and national ID number," O'Brien wrote. "Slogans were painted on his front door. One read: 'A blood debt must be repaid with blood.'"
Another story from New America Media from April said that the targets of human flesh search engines include "a man who had an illicit sexual relationship, a woman who wore high-heel sandals and stepped on a kitten's head, and a 'foreigner' who slept with many Chinese women."
The story explains China's new Web vigilantism this way: "An information expert thinks large-scale human flesh search engines are unique to China, a claim that appears to be true. This is understandable as a consequence of China's ubiquitous manpower and ingrained tradition of 'people's war' tracing back to Mao. On the other hand, because China's laws are imperfect, the Internet is seen as a way to seek justice."
It's got to be Murphy's Law that once a reporter publishes a trend story, an even better example of that trend is destined to come along. So it was that a real doozy came to light only days after I published a collection of the top Web-publishing gaffes. And this one takes the cake:
Click image to view our collection of Web news publishing gaffes, including the time Vice President Dick Cheney's obituary made its way onto the Web.
(Credit: TheSmokingGun)A nice little story hit the Web Thursday talking up China's long-awaited space mission and even including detailed dialogue between the astronauts, according to the Associated Press. Only problem was that the spacecraft hadn't even left the ground at the time the story came out.
The story was published by Xinhua, China's official news agency, in an apparent moment of clairvoyance. It was taken down after being up on Xinhua.com most of the day, the AP said.
A staffer at the agency later told the AP that the article, which had been dated September 27, was a "technical error."
The Shenzhou 7 mission, which is expected to feature China's first-ever spacewalk, did in fact take off successfully later Thursday (at least we think so--articles on the launch all cite Xinhua as their source).
But let's hope Xinhau at least comes up with some fresh quotes from the astronauts, maybe even ones that were actually said.
I am sure that you were fearing censorship at these Beijing Olympics.
No, not censorship by the Chinese.
Censorship by those folks at NBC who would prefer you to watch what they want you to watch and, most specifically, when they want you to watch it.
Well, here I am live on a Friday night, freely watching NBCOlympics.com, and witnessing the quite glorious sight of a Chinese cyclist trying to mend his bike.
It looks to me as if his back wheel has suffered a case of the bends.
Looking beneath the screen, I see that his name is Zhang and he is in 135th place. Who knew there would be that many riders in this, um, race over some sort of distance along misty roads that resemble London at six o'clock in the morning (except that there are no drunks visible)?
Here's what is strange about NBC's online coverage: I have no idea what I am watching. Yes, I have clicked on the commentary, which takes the form of a live blog stream--except that the writer is endearingly honest about his predicament.
This is how he has just spoken to me in writing: "The first time up the major climb of the finish circuit has substantially damaged the peloton, but we are still waiting on names and time gaps."
So this commentator is telling me he has no idea who is winning, no idea who is second, no idea who is third, and no idea of the time differences between the riders.
The Beijing Olympic mascots. One from the right, The Tibetan antelope. Really.
(Credit: CC Tama Leaver)If this commentary had appeared on NBC TV, the commentator in question would have been removed from his post quicker than persons of color and Mongolians have been asked to be removed from the bars of Beijing by the authorities. This commentator would have been sent to televisual Siberia.
There is a wonderfully eerie quality to the live online footage of this Olympic Some Sort of Cycle Race Along Roads.
The picture quality is quite spectacular. The mist is so real it could not possibly have been photoshopped in there by the Chinese authorities to provide some extra menacing ambience. This makes YouTube seem like student video. (Which I know some would contend it is.)
Meanwhile, the NBC livestream commentary is now telling me this: "Apologies for the data stream in the play-by-play window. We are trying to remedy the situation."
They cannot get a handle on the data. They are out of control. We have a situation here, people.
The riders, however, ride on. To the muted shouts of spectators who bang thunder sticks against the roadside barriers, as if they were praying for Kobe Bryant to miss another free throw.
Ah, NBC has heard my pleas and an overlay has appeared to tell me that we are watching a men's road race. The overlay, however, only stays on for a few seconds. Then it disappears again. So now I must rely on the official NBC Olympic online commentary. Here is the latest:
"The leading pursuit has shed some riders as they press towards the finish line 4'11" down on Patricio Almonacid."
No, I don't think they are four feet, eleven inches down. I think those are minutes and seconds. But all I can hear is the silence of a few rubber tires passing through a tunnel.
No voice is there to lead me through my bewilderment. No words of wisdom help to create excitement. Just the vague whistle of a spoke in the wildnerness. This is the live NBC Olympics.com experience.
Wait, wait.
The scrolling commentary has political news: "Iran, USA detente at the head of the main peloton as Iran's climber Hussein Askari takes a flyer and is joined by (we think) USA's Jason McCartney."
We think? We think? This might be a U.S. assault on Iran. And all they can say is "We think"?
I continue to ponder these words, watch the struggling bottom of the Iranian cyclist, and listen to the echoing nothingness that accompanies these besottingly shiver-making live images. It is as if NBC has hired John Carpenter to direct their online Olympic coverage.
And I can barely wait to see what he will do with the Romania versus Kazakhstan women's handball game.
I am tired, however. This has been live, uncensored (by NBCTV) online footage from the Olympics. I am comforted to know that I will slide beneath my comforter still a free man.
Free from the tyranny of NBC TV and happy in the otherworldly bosom of NBCOlympics.com.
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