Lenovo reports profits higher than expected

A visitor photographs Lenovo Group Ltd's Yoga Tablet at a show in Beijing. The company's second-quarter revenue was $9.8 billion, a 13 percent year-on-year gain.[Photo/China Daily]

　　Booming sales of smartphones and tablets behind increase

Lenovo Group Ltd reported a higher-than-expected second-quarter profit on Thursday boosted by growing sales in the smartphone and tablet markets.

The world's largest personal computer maker said its net profit stood at $220 million in the quarter ended in September, a jump of 36 percent year-on-year.

The company's quarterly revenue was $9.8 billion, a 13 percent increase compared with the same period last year.

A sales increase in emerging mobile devices was one of the major contributors for its business growth.

Yang Yuanqing, chairman and chief executive officer of Lenovo, said the company has sold more mobile devices than personal computers over the past months. Lenovo's consumer electronics unit, the major product lines of which were smartphones and tablets, contributed $1.5 billion in revenue.

The Beijing-based company said it has sold 29 million devices in the past quarter, the highest in the company's history. The young smartphone and tablet units are both profitable because of surging sales in emerging markets worldwide.

"Overseas mergers and acquisitions provided a major driver for Lenovo's business growth in previous quarters. This quarter's growth was because of Lenovo's own innovation and successful marketing strategy in the mobile devices sector," said Antonio Wang, associate director at industry consultancy IDC China.

Data from IDC showed Lenovo shipped 12.3 million smartphones from July to September.

However, its smartphone shipments still lagged behind Apple Inc, Samsung Electronics Co Ltd and Huawei Technologies Co Ltd.

The total shipments of the top three exceeded 127 million, according to IDC.

"Competitors such as Samsung entered the China market a long time ago, but because Lenovo is focusing on growth in the mid- and low-end markets, the distance among other brands is set to narrow," said Liu Jun, head of Lenovo's consumer electronics business.

Lenovo sold more smartphones priced under 2,000 yuan ($320) than Samsung in the Chinese market, said Liu.

China is the world's biggest smartphone market. It accounted for 39 percent of the global smartphone market as of September, data from Canalys revealed on Wednesday.

Lenovo posted the largest annual increase among the leading smartphone vendors, according to an IDC report.

"The company relied on its stronghold in the Asia-Pacific region and particularly in China, where the overwhelming majority of its smartphones went," the report added.

Lenovo has also made progress in other markets, pushing into Latin America and emerging markets in Southeast Asia.

"We will speed expansion in more emerging markets in the Middle East and Latin America through innovation," said Yang.

"Hardware making is a prominent advantage for Lenovo, but we are still looking to integrate hardware with software and applications in order to make the next-generation devices," he added.

The company said it is looking for acquisition targets for all its product lines and M&As in the smartphone sector will be the company's top task, said Wong Wai Ming, chief financial officer of Lenovo.

Earlier media reports indicated Lenovo was actively courting the drowning Canadian cell phone maker BlackBerry Ltd. BlackBerry said on Wednesday it will no longer be available for sale.

In addition, Yang estimated global demand for PCs will rebound by the end of 2014 boosted by the global enterprise-level market and growing orders from China.