Lenovo profit leaps as it extends shift to smartphones, servers

Thu Nov 7, 2013 2:04am EST
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By Paul Carsten

BEIJING (Reuters) - China's Lenovo Group Ltd (0992.HK: Quote), the world's biggest personal computer maker, said net profit jumped over a third to a quarterly record as it extended its cruise into smartphones and data servers to offset a global decline in PC sales.

Reporting net profit rose a better-than-expected 36 percent in July-September, Lenovo said on Thursday it will continue to chase acquisitions while mining growth in the market for cloud computing and back-end information storage that's lured companies from rival IBM (IBM.N: Quote) to Internet retailer Amazon.com Inc (AMZN.O: Quote).

The ambitious company was among a range of suitors to approach BlackBerry Ltd (BB.TO: Quote) before the troubled device maker took itself off the market, according to sources familiar with the matter.

Lenovo, with a 17.3 percent share of worldwide PC shipments according to research firm IDC, reported net profit of $219.7 million for its fiscal second quarter, its highest for any quarter, extending its streak of more than three years of double-digit quarterly profit growth.

The profit compared with $162 million a year earlier, and with a $199.12 million consensus forecast on Thomson Reuters Starmine SmartEstimate.

Lenovo has been aggressively pushing into smartphones and servers as it seeks alternative channels of income to the shrinking PC market, which contracted 7.6 percent in the quarter ended September, according to data from research firm IDC.

"Given its strong financial position, Lenovo will continue to actively look for inorganic growth opportunities that would supplement its organic growth strategy and accelerate future expansion," Lenovo said in its earnings statement.

The company also said it remains confident the Chinese economy is recovering.   Continued...

Lenovo tablets and mobile phones are displayed during a news conference on the company's annual results in Hong Kong May 23, 2013. REUTERS/Bobby Yip