Lenovo sees profit growth sag in fiscal Q2

Lenovo became the world's top PC vendor during the quarter, according to research firm Gartner

Lenovo's net profit for the fiscal second quarter increased by only 13 per cent year-over-year, marking a shift from the high profit growth the company has previously seen.

For the fiscal second quarter ending on Sept. 30, Lenovo's net profit reached $US162 million. Revenue for the quarter was a record $US8.7 billion, a year-over-year increase of 11 per cent.

In its fiscal first quarter, Lenovo reported 30 percent year-on-year growth in net profit. Last year, the company saw profit growth almost doubling year-over-year in some quarters.

Lenovo has consistently reported solid growth in its product shipments despite slowing growth in the PC industry, and competition from Apple's iPad which has cut into sales of laptops.

The Chinese company increased PC shipments in the fiscal second quarter, and was named the world's largest PC vendor by research firm Gartner. Research firm IDC, however, still ranks rival HP as the top PC vendor with a slight lead ahead of Lenovo.

During the quarter, Lenovo reported that its PC shipments grew year-over year by 10.3 per cent. Lenovo has credited the growth to its "protect and attack" strategy, with the company maintaining its dominant position in China's PC market, while expanding into new emerging markets. In China alone, the company's revenue reached $3.9 billion, accounting for 44 per cent of Lenovo's global sales.

The company also saw growth in its Mobile Internet Digital Home group, which sells smartphones. The business group saw revenue reach $US718 million in the quarter, up 155 per cent from the same quarter last year. In China, Lenovo's smartphone shipments reached second place, behind Samsung, according to research firm Canalys.

Lenovo announced during the quarter it would begin selling smartphones in Indonesia, Philippines, Vietnam and India. Microsoft's Windows 8, which was formally launched only two weeks ago, could also help grow PC sales.

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Tags business issuesconsumer electronicssmartphoneshardware systemsdesktop pcsLenovolaptopsfinancial results

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Michael Kan

IDG News Service
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