Lenovo is seeing huge growth in smartphones and tablets as the PC market continues its decline.
In a bad sign for the PC industry, Lenovo touted its success in smartphones during the company's fiscal 2014 first-quarter earnings conference call.
Lenovo reported Thursday that quarterly profits jumped 23 percent over the same period last year. Net profit came to $174 million in the quarter ending in June compared with $141 million last year. That beat the street's profit estimate, which was expected to be $167 million.
Revenue hit $8.8 billion, up 9.7 percent from the $8 billion reported last year.
Historically, Lenovo has been viewed as a PC company, but the CEO spent a lot of time talking about its surging smartphone business during a conference call on Thursday.
"In China we sold more than 11 million [smartphone] units and continued to strengthen our No. 2 position," CEO Yang Yuanqing said.
"Last quarter, our combined sales of smartphones and tablets surpassed PCs for the first time," he said.
He said the shift to smartphones and tablets is turning Lenovo from a PC company into a "PC plus" company. Tablets with 4G capability are "gearing up," he added.
Though the CEO cited the decline in the PC market, he said customers in the corporate "enterprise" market, especially in the U.S., are upgrading their PCs from Windows XP to Windows 7 and Windows 8 -- which is driving sales.
Market researcher IDC said in July that Lenovo surpassed Hewlett-Packard to become the largest global PC vendor in the second quarter.