China's Lenovo buys and diversifies to outshine PC rivals

Wed May 22, 2013 5:29pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Lee Chyen Yee and Umesh Desai

HONG KONG May 23 (Reuters) - Lenovo Group Ltd's bold acquisitions in its flagship PC business, a foray into mobile gadgets, and a relatively light debt load are setting it apart from PC rivals as industry shipments take their steepest fall in decades.

Lenovo, a sliver away from unseating Hewlett-Packard Co as the world's top PC maker by shipments, is expected on Thursday to post a two-thirds rise in quarterly profit, its fastest in 1-1/2 years, according to analysts' estimates.

"They have been aggressive in acquiring several distributors in different regions such as Brazil, Europe and Japan over the past few years, so that basically gave them better distribution, as well as gains in market share," said Warren Lau, an analyst at Maybank Kim Eng Securities in Hong Kong.

The Chinese PC maker's net profit is expected to hit $110.0 million in the quarter ended March, up from $66.8 million a year earlier, based on Reuters calculations using unaudited nine-month financial data.

Lenovo's full-year net profit was estimated at $618.2 million in a poll of 31 analysts by Thomson Reuters I/B/E/S/, up from $472.99 million a year ago.

Research firm IDC said global PC shipments fell 13.9 percent year-on-year in the first quarter of 2013, the biggest decline since it began tracking the market on a quarterly basis in 1994, as consumers switched to mobile computing and Windows 8 sales fell short of expectations.

With shipments unchanged in the first quarter, Lenovo is outstripping other vendors. PC shipments from HP, Dell Inc , Acer Inc and Asustek Computer Inc fell by 11-33 percent during the same period, IDC said.

The latest IDC data showed that Lenovo's market share was 15.3 percent, just 0.4 percentage points lower than HP.   Continued...