Lenovo admits Motorola integration didn’t go according to plan

Lenovo announced today the first yearly loss in six years, as the group struggled to integrate Motorola and faced plummeting sales in the critical Chinese market.

Lenovo’s overall performance (including PCs and enterprise) was poor: the company posted full year revenue of $44.9 billion (down 3%) and a net loss of $128 million.

Lenovo’s Mobile Business Group recorded sales of $1.7 billion in the final quarter of the fiscal year 2015 (ending March 31). The unit sold 10.9 million smartphones in the quarter, bringing the yearly total to 66.1 million.

Most of Lenovo smartphone sales were outside of China, the area handled by the newly established Rest of World division. Lenovo sold 51 million devices here, a healthy 63% growth over last year. However, Lenovo’s sales in China fell off a cliff, with an 85% decline in the last quarter, due to the shift from carriers to open market and the increased appetite for higher-end phones.

Lenovo gave us some clues about the performance of Motorola, which it acquired from Google for $2.91 billion at the end of 2014. Moto devices contributed 5 million units in the last quarter (almost half the total sales), which generated $1 billion in revenue (out of the $1.7 billion total).

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Clearly, Lenovo isn’t happy with this performance. “Integration efforts did not meet expectations,” said a terse press release that blamed the poor China sales and a “product transition in North America [that] was not successful.”

To translate from corporate speak, Lenovo failed in the world’s two largest smartphone markets.

But the company supposedly learned a “great deal” since the Motorola acquisition and plans “actions in organization, leadership and approach.” In China, Lenovo wants to focus more on unlocked sales and the ZUK brand; in the rest of the world, the group wants to maintain growth in developing markets and “get the US business back on track with a competitive product portfolio.”

Said portfolio includes the new Moto G4 family, new Droid devices, and a new flagship coming next month and expected to be called Moto Z.

Now that we have official confirmation that Lenovo’s Motorola integration isn’t going as expected, what are your thoughts? Can Lenovo make Moto great again?