Lenovo profit jumps, beating expectations : Report

By Juro Osawa

Chinese personal-computer maker Lenovo Group Ltd. once again beat expectations, posting a 36% increase in its quarterly net profit as its bet on higher-margin products and tighter cost control paid off
Lenovo's solid earnings come at a time when most traditional PC makers are struggling amid weakening demand for desktop and laptop computers
The world's largest PC maker has adapted to falling demand by making smartphones and increasing its focus on products that can generate better margins such as its Yoga line of tablet-laptop hybrid devices
Lenovo, which overtook Hewlett-Packard Co. earlier this year, on Thursday reported a net profit of $219.7 million for the three months ended September, up from $162.1 million a year earlier
The net profit was above the average forecast for a $201 million profit by analysts surveyed by Thomson Reuters
Its earnings were also helped by higher margins in its China PC business, which has been a stable source of profit in recent years
The operating margin in its China business rose to 6.8% in the fiscal first half from 6.1% a year earlier
The China PC business benefited from higher average selling prices and stringent control of expenses, Lenovo said
The continued strength of its business in China more than made up for a decline in the operating margin in the Americas region, which includes North America and South America
Lenovo said its continued investment in Brazil, after acquiring a local electronics maker last year, weighed on the overall margin for that region
Its revenue for the fiscal second quarter rose 13% to $9.77 billion from $8.67 billion
Lenovo said its world-wide PC shipments in the quarter through September increased 2% from a year earlier
The company's PC market share also increased to 17.3% from 15.7% a year earlier, according to IDC
In contrast, the latest data from research firm IDC released last month showed that overall global PC shipments for the quarter fell 7.6% from a year earlier
While shipments also increased slightly at HP and Dell Inc., Taiwanese PC makers Acer Inc. and Asustek Computer Inc. saw their shipments plummet 35% and 34%, respectively
"Whether constrained by a weak economy or being selective in their tech investments, buyers continue to evaluate options and delay PC replacements," IDC Vice President Loren Loverde said in an earlier statement
Over the past year, Lenovo has been focusing on selling smartphones in more markets outside China
In China, Lenovo is the second-largest smartphone vendor behind Samsung Electronics Co
In the quarter through September, Lenovo said its smartphone shipments grew more than 78% from a year earlier to 12.3 million units
Outside China, Lenovo now sells smartphones in several markets in Asia, Latin America, the Middle East and Africa