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Lenovo scores record sales amidst PC industry slump

Its PC-making rivals may be hurting, but Lenovo is turning in record results as evidenced by its latest quarter and fiscal year.

Lenovo's Helix laptop/tablet.
Lenovo's Helix laptop/tablet.

Lenovo seems to be the only top PC vendor bucking the trend of sour sales.

The Hong Kong-based company today reported record results for its fiscal year that ended March 31. For the year, Lenovo captured sales of $34 billion, a 15 percent increase from the prior year. Earnings hit $635 million, up 34 percent. And its PC shipments grew by 10.2 percent, compared with an overall industry drop of 8.1 percent.

Lenovo's 15.5 percent market share for the year put it in within reach of stealing the top spot from Hewlett-Packard. A recent report from Gartner said that Lenovo and HP were in a "virtual tie" for the title of the world's leading PC vendor last quarter.

The company's fiscal fourth quarter was also kind. Revenue hit a record of $7.8 billion, while earnings soared by 90 percent to $127 million.

Why is Lenovo doing so well when other PCs makers are struggling? One of the reasons is global expansion.

"Somebody over there is doing something right," Sanford C. Bernstein analyst Alberto Moel told Bloomberg. "The size of the beat is quite solid. They did better margins everywhere, with material expansion in PCs in Europe, Middle East, and Africa as well as North America."

The company also has been buying up distributors to better reach across the world.

"They have been aggressive in acquiring several distributors in different regions such as Brazil, Europe, and Japan over the past few years, so that basically gave them better distribution, as well as gains in market share," Maybank Kim Eng Securities analyst Warren Lau told Reuters.

Futher, Lenovo is more than just a PC vendor. Its tablets and smartphones are seeing heavier demand, especially in China where its smartphone shipments were 3.7 times greater than those from the prior year.

"Despite a challenging macro-economic environment and ongoing PC industry transformation, Lenovo delivered a strong performance in the 2012/13 fiscal year," Lenovo Chairman Yang Yuanqing said in a statement. "Not only were we the fastest growing among all major PC players, with record market share, revenue and profitability, more importantly, our smartphone and tablet businesses saw dramatic growth."

Lenovo is eyeing further gains in the tablet and smartphone arena as well as more business in the enterprise market.

"Going forward, we will focus our investments on the fast-growing tablet, smartphone, and enterprise hardware areas, while working to enhance the profitability of our core PC business," Yang added. "We are very confident in our ability to achieve success in these new areas, just as in the PC business."