Lenovo says profit up 28 per cent as mobile sales grow but global outlook challenging

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BEIJING, China - Personal computer maker Lenovo Group said Wednesday its quarterly profit rose 28 per cent on strong sales of smartphones and tablet computers but warned this year's market will be tough.

The company, vying with Hewlett-Packard Co. to become the world's biggest PC maker, said it earned $205 million in the three months ending in December. Global revenue rose 12 per cent to a record $9.4 billion.

The results reflected a rapid shift in global consumer tastes toward mobile services. That is forcing traditional technology leaders to scramble to roll out new products and diversify into services as well as hardware.

Sales by Lenovo's mobile and digital home unit soared 77 per cent to $998 million, though that was only 11 per cent of total revenue.

The company said its smartphone business in China was profitable for the first time and handsets were launched in India, Indonesia, Russia and other markets. Shipments of media tablets rose 77 per cent.

"Lenovo has not only achieved record revenue, profit and global PC market share last quarter, but also our smartphone and tablet businesses have delivered hyper growth," said chairman Yang Yuanqing in a statement. "We are confident that we can win through differentiation and will be the innovation leader in the PC Plus era."

Revenues in the bigger but slower-growing PC market rose 7 per cent to $7.9 billion.

Lenovo, which is based in Beijing and in Research Triangle Park, North Carolina, warned PC demand "remains challenging" due to weakening global economic conditions but said it plans to expand its cloud, services and other businesses.

In its home China market, PC shipments rose 2 per cent, down from the previous quarter's 8 per cent. Lenovo said that outpaced an industry-wide decline of 2 per cent in China, raising its market share by 1.4 percentage points to a record 36.7 per cent.

Shipments in the United States and the rest of North America rose 11 per cent over a year earlier.

Lenovo released a new version of its ThinkPad notebook computer, the X1 Carbon, in August that it said was lighter and quicker to mimic the convenience of a tablet. Lenovo acquired the ThinkPad brand with IBM Corp.'s personal computer unit in 2005.

Organizations: Lenovo Group, Hewlett-Packard Co, PC Plus IBM Corp.

Geographic location: China, BEIJING, India Indonesia Russia Research Triangle Park North Carolina United States North America

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