Lenovo profit rises on PCs, smartphones boost

File photo: Reuters.

File photo: Reuters.

Published May 21, 2014

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Beijing - Lenovo, the world’s largest maker of personal computers, reported a 25 percent jump in fourth-quarter profit as its desktop models and mobile devices gained global market share.

Net income climbed to $158.3 million in the three months ended March from $126.9 million a year earlier, the company reported today.

That compared with the $163.6 million average of nine analysts’ estimates compiled by Bloomberg.

Chief executive Yang Yuanqing has maintained Lenovo’s leadership in the PC market at a time when industrywide shipments have contracted, and he also is expanding sales of smartphones overseas.

Lenovo, which in January agreed to buy Motorola Mobility for $2.9 billion, plans to triple the number of countries where it sells phones by adding 20 new markets in the Middle East, Africa and Latin America.

“The company has always been competitive, be it PCs and mobility,” Dennis Lam, an analyst with DBS Vickers Hong Kong, said in an e-mail today.

“The PC market has somewhat stabilized in the face of cannibalization from tablets and smartphones. The smartphone side has become more challenging as competition heats up from low end smartphones, especially in China.”

Lenovo’s sales climbed to $9.4 billion from $7.83 billion a year earlier.

That beat the $9 billion average of 21 analysts’ estimates compiled by Bloomberg.

 

Boosting Smartphones

 

Lenovo, which has its headquarters in Beijing and Morrisville, North Carolina, rose 2.2 percent to HK$9.33 at 1:21 p.m. in Hong Kong trading.

The stock has lost 0.9 percent this year, compared with the 2 percent drop in the city’s benchmark Hang Seng Index.

While worldwide PC shipments dropped 1.7 percent in the three months ended March, Lenovo expanded market share as sales rose 11 percent, market researcher Gartner. reported last month.

Lenovo maintained the No. 1 spot in the global PC market in the period with 17 percent of shipments, while Hewlett-Packard was second with 16 percent, Gartner said.

Lenovo’s smartphone shipments jumped 63 percent in the period to 12.9 million units, researcher International Data reported last month. That lifted its global market share for the devices to 4.6 percent, from 3.6 percent a year earlier, IDC said.

Lenovo ranks fourth globally behind Samsung Electronics, Apple and Huawei Technologies, IDC said.

Yang plans to keep the smartphone business growing in part through acquisitions.

In January, the company announced plans to buy Google’s Motorola Mobility handset unit for $2.91 billion in cash and stock.

Yang also is expanding in other types of hardware and in January announced plans to buy International Business Machines’s low-end server unit for $2.3 billion.

The purchase will add a business with wider profit margins than PCs and give it about 14 percent of that market. - Bloomberg News

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