China’s Lenovo Group Ltd — on track to become the world’s top maker of personal computers — reported a record quarterly profit, up by a third from a year earlier, as it gained more share in the PC market and made inroads in the smartphone business.
The ThinkPad maker — China’s No. 2 smartphone vendor — said on Wednesday net profit in the October-December quarter had risen to $204.9 million, beating an average estimate of $178.4 million in a Thomson Reuters I/B/E/S poll of 11 analysts and exceeded its record of $172 million in three months ended December 2007.
In the third quarter, overall revenue grew 12% from a year ago to $9.4 billion, with bulk coming from its PC business.
Lenovo has rapidly gained market share in the PC sector on the back of acquisitions over the past few years. The company trails Hewlett Packard Co by a slim margin in PC shipments according to technology research group IDC. Lenovo said its China smartphone business achieved profitability for the first time during the quarter.
On Wednesday, Lenovo shares closed down 2.7%, prior to the results announcement, against Hang Seng’s 0.7 % rise.
As PC demand growth slows Lenovo has been diversifying into the mobile device sector to tap robust demand for smartphones and tablets, particularly at home in China.
“In my opinion, Lenovo’s strategy in mobile devices is that it will focus initially on the overseas markets that it’s most familiar with and this includes emerging markets,” Eve Jung, an analyst at Nomura Equity Research.
“However, it will face challenges in the sector as companies like Acer and Asustek roll out cheaper tablet PC models to aggressively target markets such as China, which is Lenovo’s traditional stronghold,” she added.