Lenovo 3Q profit up by half, warns of disk supply

Feb 09, 2012

(AP) -- Lenovo Group Ltd., the world's second biggest personal computer maker, said Thursday that quarterly profit grew by more than half but warned hard drive costs would remain high amid a global shortage.

The company said it's confident of closing in on the top spot in PC sales as it reported strong sales growth across all major markets even as it focuses more attention on the burgeoning smartphone and mobile .

Net income rose to $153 million, or 1.46 cents per share, in the October-December period, which is the company's third fiscal quarter. That's up 54 percent from the same period the year before.

Sales jumped 44 percent to a record $8.4 billion as its share of the global hit a high of 14 percent.

Lenovo posted 30 percent sales growth in China, which accounts for about two-fifths of total sales. Sales in Africa, Latin America and other emerging markets rose 13 percent.

Strongest growth came in developed markets including Western Europe and North America, where sales zoomed up 81 percent. They were helped partly by new a joint venture with . in Japan and the purchase of Germany's Medion AG, a maker of and consumer electronics. Both deals were completed in July.

The company, which is based in Beijing and has U.S. headquarters in Raleigh, North Carolina, said market share in China, the world's biggest PC market, hit a high of 35.3 percent.

Lenovo, which acquired IBM Corp.'s PC unit in 2005, overtook . in the third quarter of 2011 to become the second-largest by shipments worldwide, according to both International Data Corp. and Gartner.

"We are closing the gap with No. 1," held by rival Hewlett-Packard Co., said Chairman Yang Yuanqing.

Gross profit margins dipped in the quarter because of higher prices for hard disk drives. Flooding in Thailand last year shut down production at a swath of hard drive factories, crimping .

The shortage is adding about $5-$10 to the cost of each hard drive, Yang said.

Chief Financial Officer Wong Waiming said the impact of the floods on hard drive production will "likely continue to affect global PC supply" into the next quarter and hard drive costs "will continue to stay high in the short term."

Worldwide, Lenovo's PC shipments rose 37 percent even as the global personal computer industry struggled. But Yang signaled that the company is starting to look past that market.

"We are already thinking ahead and preparing for the next steps past the traditional PC," he said.

Lenovo entered the wireless Internet market in 2010 and has launched smartphones and Web-linked tablet computers to compete with Apple Inc., South Korea's Samsung Electronics Corp. and Taiwan's HTC Corp.

Yang said a "smart" or Web-connected TV running on the Android operating system will be launched in China in April. He said the company aims to partner with many "third parties" to provide content for the TV.

Separately, executives rejected accusations by Taiwan-based rival Acer Inc. that its former chief executive Gianfranco Lanci breached a noncompete clause when he left Acer last year and went to work for Lenovo. Acer is suing Lanci.

Yang said the company would not comment on the lawsuit filed in Italy except to say that Lanci's hiring "meets all legal requirements."

Explore further: EU Parliament votes to break up Google

not rated yet
add to favorites email to friend print save as pdf

Related Stories

PC maker Lenovo says profit up 25 percent

Feb 17, 2011

(AP) -- Chinese personal computer maker Lenovo said Thursday its quarterly profit rose 25 percent on double-digit sales growth in developing markets.

Lenovo says 1H profit nearly doubled

Nov 03, 2011

Lenovo Group, one of the world's leading personal computer manufacturers, reported Wednesday that its profit in the first half of the year nearly doubled on strong emerging market sales.

PC maker Lenovo's quarterly profit up 45 percent

Nov 10, 2010

(AP) -- Lenovo Group, the world's fourth-largest personal computer maker, said Wednesday its latest quarterly profit rose 45 percent on strong sales in China and other emerging markets.

Lenovo says business will focus on mobile Internet

Mar 12, 2010

(AP) -- Lenovo Group expects wireless Internet products to account for up to 80 percent of its sales within five years as it pursues expansion in faster-growing emerging markets, CEO Yang Yuanqing said Friday.

PC maker Lenovo turns to profit on China sales

Aug 19, 2010

(AP) -- Lenovo Group, the fourth-largest personal computer maker, said Thursday it rebounded to a quarterly profit from a loss a year earlier, driven by strong sales in China and other emerging markets.

Recommended for you

EU Parliament votes to break up Google

Nov 27, 2014

The European Parliament voted overwhelmingly for the break-up of Google Thursday in a largely symbolic vote that nevertheless cast another blow in the four-year standoff between Brussels and the US Internet ...

Toyota finds new air bag issue, recalls more cars

Nov 27, 2014

Toyota Motor Corp. recalled more than 40,000 vehicles in Japan on Thursday as part of a worldwide scare over defective air bags and is investigating a new type of air bag problem that could lead to further recalls.

Netflix sues Yahoo CIO for alleged kickbacks

Nov 26, 2014

Netflix is suing a former company vice president who is now chief information officer at Yahoo, accusing him of receiving money from vendors he hired to work with the video streaming company.

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.