Lenovo Profit Soars On Strong Smartphone, Tablet Sales


Chinese PC manufacturer Lenovo Thursday reported a 36 percent year-over-year rise in profit for its second fiscal quarter ended Sept. 30, with strong sales of its tablets and smartphones leading the way.

Lenovo's profit reached $220 million for the quarter, compared with $162 million in the same period a year ago. Revenue rose 13 percent year over year to $9.8 billion.

"We are optimistic about the industy's outlook," said Yang Yuanqing, CEO of Lenovo, in a statement. "Benefiting from corporate refresh and China market improvement, the PC market is recovering and tablet growth continues shifting to mainstream and entry-level segments, as well as emerging markets. These are Lenovo's strength areas. We are confident that we will capture these opportunities and continue our strong growth."

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The world's No. 1 PC maker continues to promote and grow its PC business, with the company reporting that 51.1 percent of its revenue came from the sale of its notebooks and 27.7 percent from desktops. However, as worldwide PC sales have continued to decline, Lenovo has aggressively expanded into smartphones and tablets.

In an interview earlier this month with CRN, Jay Parker, president of Lenovo North America, said, "We're not confused about who we are. We are a PC and device company that also includes tablets, servers and any number of products we may launch over time. That is where our value is and that's where we make our money.

"I believe others in the market are confused about who they are and what they want to be. So that is our proposition to the channel, when it comes to services solutions and more complicated sales, is we lean on our channel to do what it does best. We believe that's the value that they bring. If we can give them the best device with the best feature set, the best price, best quality and they can combine it all with their offerings -- that's when they can win in the market."

This year, Lenovo reported 78 percent year-over-year growth in smartphone sales for the quarter. Tablet sales, meanwhile, increased 421 percent year over year for the quarter. Lenovo reported that 77 percent of tablet sales occurred outside China.

In the interview with CRN, Parker said, "We have said publicly that we plan to ship smartphones in the [U.S.] market before the end of 2014. I can't tell you anything more.

"So here is why we are excited about entering the U.S. market. If you look at smartphones, what a lot of people in this market don't understand is we are actually already the No. 4 smartphone maker in the world -- and about a hair from becoming No. 3. We are growing faster than any smartphone maker in the world."

For the quarter, Lenovo reported that smartphones and tablets, what it calls "mobile-Internet-focused devices," accounted for 15.1 percent of sales.

TOM SPRING contributed to this story.

PUBLISHED NOV. 7, 2013