Legend mulls restructuring to enhance competitiveness
By Liu Baijia (China Daily)
Updated: 2004-02-19 15:55

The biggest Chinese computer maker Legend Group Ltd says although its sales increased by 17 per cent year-on-year in its third quarter ending on December 31, the company will reorganize its structure amid growing competition.

Revenues for the Hong Kong Stock Exchange-listed company reached HK$6.55 billion (US$840 million) due to robust growth of some high-end products.

Its net profits stood at HK$325 million (US$41.67 million) compared with HK$318 million (US$40.77 million) in the same period the previous year.

"Our growth in the third quarter is quite healthy," said Mary Ma, senior vice-president and chief financial officer of the Chinese computer maker.

Liu Chuanzhi, chairman of Legend Group Ltd, poses with their latest desktop computer which can link up to audio and video electronic appliances at home, during a news conference in Hong Kong February 18, 2004. [Reuters]

Legend's computer business maintained a similar growth with the market at 16.5 per cent, but its notebook computer business grew by 68 per cent over the previous year.

Its printer business more than doubled in the quarter and information technology consulting services rose by 183 per cent year-on-year in the third quarter.

However, the company has been facing an increasing amount of competition.

According to US-based consulting firm Gartner, Legend lost its title as the biggest notebook maker on the Chinese mainland to US giant IBM.

At the same time, while Legend computer shipments grew by 15.1 per cent in 2003 according to Gartner, US companies Dell and IBM grew by 63 per cent and 20 per cent respectively.

Yang Yuanqing, Legend president and chief executive officer, also said on February 18 in a conference call that his company failed to achieve its three-year goal for the 2001-03 period.

"Although our revenues grew by 26 per cent over 2000 in the past year and net profits increased by 50 per cent, which should be quite successful in the industry, the board of directors agree we did not realize the goals that we set three years ago," said Liu Chuanzhi, chairman of Legend.

The computer company attributed the failure to high expectations for 2000 during the peak of the Internet bubble, not paying much attention to competition from international companies after the country's accession to the World Trade Organization, and insufficient planning of company resources.

Legend Group decided to restructure the company and unveiled the plan on February 18.

The computer firm will have three main business units: core information products, key telecommunications products, and other products and services including information technology consulting, software outsourcing and network products.

Legend also divided its business into 18 geographic units, instead of the previous seven, to shorten the distance between the company and customers.

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