Lenovo Group Ltd, the world's third-biggest PC maker, almost tripled fiscal second-quarter profit, beating analysts' estimates, after reducing jobs and winning market share.
Net income for the three months ended September 30 rose to $105.3 million, or 1.12 cents per share, from $38 million, or 0.43 cents, a year earlier, the Raleigh, North Carolina-based company said in a statement to the Hong Kong stock exchange. Five analysts set a median profit estimate of $72 million in a Bloomberg survey.
CEO William Amelio has expanded outside China to target customers from Hewlett-Packard Co and Dell Inc, and pledged to extend employee cuts. Lenovo, Asia's biggest PC maker, plans to increase sales of laptops to consumers, a market that researcher IDC says is growing three times faster than the corporate segment.
"Lenovo is doing all the right things - it's gaining market share, increasing PC shipments and controlling costs - and that's showing in the results," said Jack Tse, a Hong Kong-based analyst at Bear Stearns Asia Ltd. Tse rates the stock "outperform" with a target price of HK$8 by end of 2008.
The company's shares fell 2.1 percent to HK$8.55 at the end of trading in Hong Kong, before the earnings were announced. The stock has almost tripled this year, compared with a 58 percent gain in the benchmark Hang Seng Index. Lenovo's third-quarter sales rose 20 percent from a year earlier to $4.43 billion.
The Chinese company, which moved its headquarters to the US after acquiring IBM's PC unit in 2005, joined market leader Hewlett-Packard and Acer Inc in raising shipments by double digits in the third quarter. Dell, the world's second-biggest PC maker, was the only one of the top five with single-digit growth.
Lenovo's global PC shipments in the three months ended September rose 23 percent, giving it an 8.2 percent market share, compared with 7.7 percent a year earlier, Framingham, Massachusetts-based IDC said last month.
The computer maker plans to sell laptops to consumers in the US, France, Russia and South Africa starting January, Chairman Yang Yuanqing said. Lenovo lags behind Hewlett-Packard and Dell in the consumer market, IDC said.
Source:China Daily/Bloomberg News
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