Capitalizing on a business customer base eager to switch away from Hewlett Packard, and a still buoyant PC market, Lenovo reported their Q3 results early Thursday beating market forecasts.
While the company is still officially the world’s second largest PC manufacturer, its steady rate of growth means it will soon overtake HP.
Lenovo had $8.4 billion in sales during Q3, which accounted for a 44% increase. From these sales the company posted $154 million in profit, an increase of 54%.
“Despite the worldwide hard drive shortage in the past quarter, Lenovo continued to achieve strong growth with record results in market share and revenue, as well as record high in PTI (pre-tax income) of US$192 million. For the first time, Lenovo became the number one vendor globally in commercial PCs and in consumer desktop,” said Yang Yuanqing, Lenovo Chairman and CEO.
“We saw strong progress in our Mobile Internet business. During the quarter, Lenovo sold more than 6.5 million phones, and almost half were smartphones. Lenovo’s smartphone market share in China reached double-digit market share in December. We also see strong momentum in our tablet business. All these successes demonstrate that Lenovo has built a strong foundation for the next steps beyond traditional PCs.”
Market analysts point to Lenovo’s performance in China as a key ingredient to the company’s success.
Sales in China accounted for 42% of Lenovo’s total sales. This past quarter, Lenovo’s market share in China rose 3.1%.
“Lenovo’s performance in China is quite a major factor on why it beat the consensus in the third quarter. It continued to gain market share and its margins there are also the highest compared to the performance in other emerging markets,” said Jenny Shih, an analyst with Daiwa CapitalMarkets in Taipei to Reuters.
Mr.Shih also pointed out that growth in the United States, considered a mature market, largely came at the expense of HP floundering during the failed regime of ex-CEO Leo Apotheker.
“[Lenovo] is also doing pretty well in certain mature markets. The United States for example, has gained market share as some commercial PC users switched to Lenovo given concerns over HP’s management and strategy,” Mr.Shih said.
During Thursday trading on the Hong Kong exchange, Lenovo’s shares rose as much as 4.8 percent to hit a high of HK$6.55, the highest level since May 2008.
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