Lenovo Boosts Net Income 60% on Medion, NEC PC Acquisitions
Lenovo Group Ltd., the world’s second-biggest maker of personal computers, posted a 60 percent increase in fourth-quarter profit as acquisitions in Germany and Japan helped boost shipments and market share.
Net income climbed to $67 million in the three months ended March 31 from $42 million a year earlier, Lenovo said in a statement today. That beat the $63.1 million average of nine analyst estimates compiled by Bloomberg. Revenue rose 54 percent to $7.5 billion.
Lenovo sold more computers including Thinkpad laptops to businesses in the U.S. and emerging markets, bringing it closer to Chief Executive Officer Yang Yuanqing’s target of becoming the world’s largest PC maker. Yang also helped boost sales by acquiring control of Medion AG, an Essen, Germany-based computer maker, and the PC unit of Tokyo-based NEC Corp. last year.
“Solid revenue growth was lifted by above-industry volume growth and maiden contributions from NEC and Medion,” Jonathan Ng, a Singapore-based analyst at CIMB, said in an e-mail. “Profit is growing in line with top-line growth, reflecting that Lenovo is able maintain its margin despite increased investment in mobile devices.”
Yang is also increasing development of smartphones, tablets and Internet-ready TVs to widen the company’s consumer lineup and challenge Apple Inc. and Samsung Electronics Co.
“Probably half of the growth is coming from acquisitions,” Alberto Moel, who rates Lenovo shares market perform at Sanford C Bernstein & Co. in Hong Kong, said before the announcement. “Their organic growth is still pretty good, and they have managed to pick up market share across the board.”
Lenovo, which bought the PC division of International Business Machines Corp. in 2005, said revenue from China rose 32 percent to $2.9 billion in the quarter, or 39 percent of the company’s total.
Sales in its emerging-market division, which includes India and Russia, rose 43 percent to $1.2 billion.
Lenovo sold more computers including Thinkpad laptops to businesses in the U.S. and emerging markets, bringing it closer to Chief Executive Officer Yang Yuanqing’s target of becoming the world’s largest PC maker. Yang also helped boost sales by acquiring control of Medion AG, an Essen, Germany-based computer maker, and the PC unit of Tokyo-based NEC Corp. last year.
“Solid revenue growth was lifted by above-industry volume growth and maiden contributions from NEC and Medion,” Jonathan Ng, a Singapore-based analyst at CIMB, said in an e-mail. “Profit is growing in line with top-line growth, reflecting that Lenovo is able maintain its margin despite increased investment in mobile devices.”
Yang is also increasing development of smartphones, tablets and Internet-ready TVs to widen the company’s consumer lineup and challenge Apple Inc. and Samsung Electronics Co.
“Probably half of the growth is coming from acquisitions,” Alberto Moel, who rates Lenovo shares market perform at Sanford C Bernstein & Co. in Hong Kong, said before the announcement. “Their organic growth is still pretty good, and they have managed to pick up market share across the board.”
Lenovo, which bought the PC division of International Business Machines Corp. in 2005, said revenue from China rose 32 percent to $2.9 billion in the quarter, or 39 percent of the company’s total.
Sales in its emerging-market division, which includes India and Russia, rose 43 percent to $1.2 billion.
