Lenovo posts robust results

PC maker posts 30% increase in slow period for industry

dranii@newsobserver.comAugust 16, 2012 

Lenovo, which is on the verge of reaching its goal of becoming the No. 1 PC maker, posted a 30 percent increase in quarterly profits that exceeded analysts’ expectations.

The company reported Thursday that revenue rose 35 percent to $8 billion in its fiscal first quarter, which contrasted sharply with a sluggish market but nonetheless lagged the torrid 54 percent jump in revenue it enjoyed last quarter. Profit totaled $141 million.

“We are on our way to winning the gold medal,” CEO Yang Yuanqing said during a conference call. “No matter whether in commercial or consumer, desktop or notebook, all had a record high market share.”

Lenovo is based in China but has about 2,000 workers at its executive headquarters in Morrisville.

“The PC market is not doing well globally, but Lenovo’s market share gains are offsetting that weakness,” Barclays analyst Kirk Yang told Bloomberg News.

Lenovo’s American depositary receipts, akin to common stock, traded 6 percent higher Thursday morning on the news. Its ADRs have risen 29 percent this year.

PC shipments rose 24.4 percent, compared to a nearly 2 percent decline for the industry. It marked the 11th quarter in a row that Lenovo’s growth outpaced all its major rivals. In addition to worldwide organic growth, acquisitions in Germany and Japan have fueled its expansion.

“To maintain growth in this challenging environment is difficult,” Yang said. “To do that while also improving profitability is even harder, but Lenovo, we did it.”

Sales in China rose 24 percent and accounted for 44 percent of total sales.

Sales in North America totaled $1.2 billion, up 7 percent. Last quarter, the company rose to No. 4 in the U.S. market, according to research firm IDC.

The company recently announced – at a press briefing at Raleigh’s PNC Arena – that it is now the official PC sponsor of the National Football League.

“This will significantly lift our brand image in North America,” Yang said.

Lenovo’s smartphone business in China nearly doubled to 9.8 percent for the quarter. Moreover, its market share hit 13 percent in June and it has become the No. 2 mobile phone vendor in China. It doesn’t produce a smartphone for the U.S. market.

Ranii: 919-829-4877

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