Lenovo extends edge over PC rivals
The biggest computer maker beats profit estimates as it looks to expand business
HONG KONG— The Lenovo Group’s profit beat analyst estimates as the world’s biggest PC maker widened its lead over rivals, even though a strong U.S. dollar hurt sales.
Net income for the three months ending March fell 37 per cent to $100 million (U.S.), Lenovo said in a statement. That beat the $91.6 million average of analyst estimates compiled by Bloomberg. Revenue, which missed estimates, would have been higher if not for “significant currency impacts,” it said.
Personal computer shipments rose to an annual record with market share rising in all regions. The company also maintained its status as the biggest smartphone maker behind Samsung Electronics and Apple, while it broadens into new businesses, including enterprise computing.
“Lenovo’s increasing market share in PCs helped them leverage scale to cut costs and boost margins,” said Vincent Chen, an analyst at Yuanta Financial Holding Co. in Taiwan.
Sales for the period climbed 21 per cent to $11.3 billion, missing the $12.1 billion average of analyst estimates. Growth would have been 28 per cent if not for currency pressure, the company said in the statement Thursday.
Lenovo’s enterprise group, which includes last year’s purchase of the System X business from IBM Corp., posted a pre-tax loss last quarter, it said. Full-year revenue at the unit was $2.63 billion, and is on track for $5 billion sales within a year, the company said Thursday.
The U.S. navy is evaluating whether it will keep using products from that IBM division because it is now owned by a Chinese company, U.S. Naval Institute News reported on its website May 5. Any effect would be minor, chairman and CEO Yang Yuanqing said.
The quarter was Lenovo’s first full reporting period to include results from the $2.8-billion purchase of Motorola Mobility from Google Inc. That unit is on track to meet its previously-announced goal to turn profitable within four to six quarters of the acquisition, Yang said.