Lenovo's profit leaps

Sales growth in China offsets declines in the Americas

BEIJING -- Lenovo Group, the Chinese computer maker with a world headquarters in Morrisville, said Thursday that its quarterly profit rose 65 percent as strong sales in China and emerging economies offset weakness in the United States.

Profit for the three months ending June 30 was $110 million, or $1.25 per share, the company said. Sales rose 10 percent to $4.2 billion.

"Despite a softening global economy, we delivered solid gains in worldwide sales, PC shipments and profits," Chairman Yang Yuanqing said in a prepared statement.

Yang expressed confidence that the Beijing Olympics, which open today, will help the company's efforts to establish a global brand. Lenovo is the only Chinese company among 12 worldwide partners of the International Olympic Committee and is supplying computer equipment and technicians to the games.

"The global spotlight is shining on Lenovo, our products and our people," CEO William J. Amelio said in a conference call with reporters.

Sales in Greater China rose 22 percent to $1.7 billion. China accounted for 41 percent of sales. The strength of its home market has helped to drive Lenovo's expansion. But it faces competition from industry leader Hewlett-Packard and No. 2 Dell Inc. Both are trying to expand in China, and Dell has launched a low-cost PC aimed at Chinese buyers.

Lenovo's sales in the United States and the rest of the Americas fell 4.8 percent to $1.1 billion.

Lenovo has said it expects to avoid a serious hit from the U.S. slowdown because it depends on the American market for only a small percentage of its sales.

"We're all hopeful that the market is going to continue to improve," Amelio said. Meanwhile, he said, "we're working diligently on taking down costs and cutting expenses."

Lenovo underwent a sweeping restructuring after acquiring IBM Corp.'s personal-computer unit in 2005. The company now has about 1,300 local employees.

Lenovo entered the competition for ultra-small PCs this week with the release of its first "netbook." Aimed at students and first-time buyers and starting at $399, it offers the ability to surf the Web, send e-mail and run simple applications.