Lenovo Q1 profit almost doubles, beating estimates

Lenovo Q1 profit almost doubles, beating estimates
Hong Kong: Lenovo Group Ltd, the world's No 3 PC brand, reported a near doubling of its first-quarter net profit, beating expectations due to acquisitions and growth in key emerging markets such as China.

Lenovo faces the risk of slowing US and European economies as it pushes into mobile devices with its Lepad tablet PC and Lephone smartphones to take on competitors such as Apple and Samsung Electronics.

On Tuesday, Dell, the world's No 2 PC maker, slashed its 2012 revenue forecast due to an already weak outlook for technology spending this year worsened.

Lenovo, the most well-known Chinese PC brand, is trying to grab more market share in its mainstay PC business, a sector whose growth has been stunted by handheld gadgets that allow users to make calls, surf the Internet and check emails.

"Although the worldwide PC market has shown marginal improvement and returned to growth during the fiscal quarter one, challenges to worldwide PC demand remain such as the pace of global economic recovery and the on-going debt crisis in Western Europe," Lenovo said in a statement.

"Nevertheless, Lenovo remains optimistic that it has the right strategy to continue to outperform the worldwide PC market."

Lenovo's results came before the markets opened on Thursday.

Its Hong Kong-listed shares, which have fallen 1.6 percent so far this year, ended 1.9 percent higher on Wednesday, outperforming the Hang Seng Index's 0.4 percent rise.

Net profit was USD 108.8 million for the quarter ended June, up from a revised USD 54.9 million a year earlier.

The market had expected net profit of USD 78.6 million, according to the average forecast of seven analysts polled by Thomson Reuters I/B/E/S. In the previous quarter ended March, Lenovo's net profit had more than tripled to USD 42.1 million.

On Tuesday, Dell, the world's No 2 PC maker, slashed its 2012 revenue forecast due to an already weak outlook for technology spending this year worsening.

In June, Lenovo acquired Germany's Medion AG, just months after it signed a joint venture deal with NEC Corp to sell laptops in Japan.

The Medion deal is the biggest for the company since it bought IBM's PC unit six years ago.

Bureau Report