Lenovo beats estimates with surge in earnings

Boosted by a leading market share in China, the PC maker sees its third-quarter earnings rise to $99.6 million from $79.5 million a year ago.

Lenovo ended its third quarter with solid gains in earnings and sales but cautioned that uncertainty in the global economy may impact the road ahead.

For the quarter ended December 31 (PDF), the Hong Kong-based PC maker took in a profit of $99.6 million, a healthy 25 percent boost from the $79.5 million earned a year ago. That handily beat estimates from analysts polled by Reuters, who were looking for net income of $86.2 million, according to Reuters.

Sales rose 22 percent to $5.8 billion from $4.7 billion in the prior year's quarter, helping Lenovo grow the fastest among the world's top five PC makers for the fifth quarter in a row, according to the company. Lenovo also said that PC shipments for the quarter grew by 20.6 percent compared with the average industry rate of 3.4 percent. At home, quarterly results were also helped by Lenovo's 32.2 percent market share in China, its highest ever.

"Our core PC business continues to deliver balanced growth. At the same time, we saw great momentum in our mobile Internet business which double the sales of the Lenovo smartphone from previous quarter," Lenovo CEO Yang Yuanqing said in a statement. "This growth was driven by investments in marketing, product development, and the creation of a new, more focused Mobile Internet and Digital Home business group."

Despite the robust quarter, Lenovo is warning that growth over the near term could be affected by the still uncertain economic climates in the U.S. and Europe.

"The worldwide PC market growth has further moderated in the quarter, and certain challenges in the global economy and debt crisis in the mature markets remain," the company said in its earnings report. "Lenovo, however, remains cautiously optimistic about the market outlook and confident that the Group will continue to outperform the worldwide PC market.

Beyond its own core PC market, Lenovo has been looking at other opportunities to drive growth. The company recently kicked off a joint venture with NEC to create a PC business in Japan. And its new mobile Internet group is designed to focus on tablets and smartphones, as well as such items as smart TVs, cloud computing, and the digital home.

Lenovo launched its LePhone smartphone in China in early 2010 and in the U.S. toward the end of the year. The company has also been prepping its first tablet, dubbed LePad , which is slated to hit the market this summer to take advantage of Android 3.0 Honeycomb.

About the author

Journalist, software trainer, and Web developer Lance Whitney writes columns and reviews for CNET, Computer Shopper, Microsoft TechNet, and other technology sites. His first book, "Windows 8 Five Minutes at a Time," was published by Wiley & Sons in November 2012.

 

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