Lenovo Net Income Beats Analyst Estimates on Office Computer, China Sales
Lenovo Group Ltd. (992), China’s biggest maker of personal computers, reported first-quarter profit almost doubled, beating analysts’ estimates, after it boosted sales in emerging markets and increased shipments to businesses.
Net income climbed to $108.8 million in the three months ended June 30, or 1.08 cents a share, from $54.9 million, or 0.54 cent, a year earlier, Lenovo said today in a statement. Profit exceeded the $84 million average of seven analysts’ estimates compiled by Bloomberg. Revenue rose 15 percent to $5.92 billion.
The maker of Thinkpad laptops has outpaced bigger rivals Hewlett-Packard Co. (HPQ) and Dell Inc. in gaining market share by expanding in emerging markets such as Brazil and Russia. The Chinese company also boosted sales in its home market and attracted more orders from businesses in the U.S., where spending by companies to replace aging computers is helping offset slowing demand from consumers.
“They are very much more exposed to the corporate PC market, rather than consumer,” Jean-Louis Lafayeedney, a technology analyst who rates Lenovo shares “buy” at JI Asia in Hong Kong, said before the earnings announcement. In emerging markets, Lenovo is getting orders from multinational companies that are expanding there, as well as local businesses, he said.
Market Share
Lenovo rose 1.9 percent to HK$4.90 in Hong Kong trading yesterday. The stock has declined 1.6 percent this year, compared with the 12 percent drop in the city’s benchmark Hang Seng Index.
Global industry leader Hewlett-Packard accounted for 17.5 percent of the global PC market last quarter, rising from 17.4 percent a year earlier, according to research company Gartner Inc. Lenovo, the third biggest, increased its market share to 12 percent from 10 percent, behind Dell, which gained to 12.5 percent from 12.3 percent, according to Gartner.
Lenovo, with headquarters in Beijing and North Carolina, posted higher PC shipments in the U.S., Latin America and Asia, Gartner said.
The Chinese company, which bought the PC division of International Business Machines Corp. (IBM) in 2005, said revenue from China rose 13 percent to $2.84 billion, or 48 percent of the company’s total. Sales in its emerging-market division, which includes sales in India, Brazil and Russia, rose 26 percent to $1.04 billion.
Revenue in Lenovo’s mature-markets division, which includes its operations in the U.S. and Western Europe, rose 13 percent to $2.05 billion.
