Lenovo bucks market trend with strong PC sales

Lenovo has reported net profits of $214m for the quarter ending 30 June, up 23% compared with the same period a year ago

PC maker Lenovo has reported net profits of $214m for the quarter ending 30 June, a 23% increase compared with the same period a year ago.

Analysts had been expecting an average of $197.3m, according to estimates compiled by Bloomberg.

Revenue was up 18% to $10.4bn, driven mainly by strong sales in laptops, tablets and smartphones.

Lenovo reported laptop and tablet sales for the quarter were up 12% and 67% respectively, while the PC industry as a whole saw a 3.7% decline in laptop shipments compared with a year ago.

The company predicts the tablet market may split into niche PCs focusing on media consumption and big-screen smartphones, but said it plans to launch a new generation of products to attack both categories.

Lenovo said it had gained PC market share in most parts of the world, strengthening its position as a worldwide leader with a record 19.4% market share.

The company said it had achieved strong growth in all regions of the world, with China accounting for just over a third of its business compared with almost a half three years ago.

Although the company expects the PC market to stabilise and its strong growth to continue, the strategy of diversifying into mobile devices is paying dividends.

Mobile devices accounted for 15.3% of revenue for the quarter while mobile revenue – including smartphones and tablets - was up 32% compared with the previous year. Smartphone sales increased 39%, smartphone world market share increased to 5.2%, and world tablet market share increased to 4.9%.

"This has been a quarter of milestones for Lenovo – record PC share, a number three ranking in worldwide tablets for the first time and an even stronger number four global smartphone position," said Lenovo chairman and CEO Yuanqing Yang in a statement.

"As the PC industry recovers, the smartphone market continues its shift from premium to mainstream, and our acquisitions of Motorola Mobility and IBM x86 proceed towards completion, we see even more opportunity to keep growing rapidly,” he said.

Earlier this year, Lenovo struck deals to acquire IBM's x86 server business for $2.3bn and Motorola's handset business from Google for $3bn.

Both deals are awaiting regulatory approval, and are expected to close in the third quarter of 2014.

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