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Lenovo's Q1 net profit jumps on strong smartphone sales

The Chinese company beats analyst estimates with a 23 percent increase in net profit.

Lenovo laptop shipments rose 12 percent in the first quarter. CNET

Lenovo Group announced Wednesday that its first-quarter net profit rose 23 percent on strong sales of PCs and smartphones, beating analyst estimates.

The Chinese computer giant recorded a net profit of $213.5 million for the three-month period ended June 30, up from $174 million for the year-ago period. Analysts had been expecting an average of $197.3 million, according to estimates compiled by Bloomberg.

Lenovo credited strong sales of smartphones in China with helping push it to a record 15.8 million units shipped, a 39 percent increase that made it the No. 1 smartphone maker in China. Lenovo is now the fourth-largest smartphone maker in the world, increasing its global market share to 5.4 percent from 4.7 percent a year earlier, IDC said last month.

Lenovo's PC business, which accounts for more than 80 percent of revenue, continued to outperform the overall PC market. As global laptop shipments declined 3.7 percent year-over-year, Lenovo's laptop sales rose 12 percent, the company said. Worldwide shipments of PCs is expected to drop 6 percent overall, according to IDC, as consumers continue to embrace mobile devices like smartphones and tablets.

Lenovo's revenue for the quarter was $10.4 billion, an 18 percent increase over the same period last year.

"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 toward completion, we see even more opportunity to keep growing rapidly," Lenovo Chief Executive Yang Yuanqing said in a statement. "Lenovo continues to outperform the market and meet our commitments to improve profitability in our core businesses, while building strong pillars for future growth across our entire portfolio."

Lenovo announced a pair of deals in January worth $5.2 billion. The company said it planned to acquire IBM's x86 server business for $2.3 billion, while purchasing Motorola Mobility from Google for $2.9 billion. Both acquisitions still require US regulatory approval, which is expected as soon as the third quarter.