Lenovo buoyed for global push
Profit surge of 198pc bolsters ambitions for sales of PCs and servers
Despite a jittery global economy, mainland information technology giant Lenovo Group is betting on a banner year as it expands into international markets with new consumer-oriented personal computers and enterprise servers.
The rosy outlook from Lenovo, which has endured two consecutive restructuring programmes and a failed corporate acquisition in Europe last year, follows a record 198 per cent year-on-year increase in net profit to US$172.564 million on sales of US$4.6 billion in the company's fiscal third-quarter to December.
Its worldwide personal computer shipments grew more than 22 per cent year on year to 5.82 million units - ahead of the industry average growth of about 16 per cent - with gains in all its geographic markets, buoyed by Greater China and emerging economies in the Asia-Pacific.
'The quarter illustrates not only our ability to deliver consistent, predictable performance, but also the PC market's resiliency,' said William Amelio, president and chief executive at Lenovo. 'The global PC market is expected to grow in the double digits this year, given the strong outlook in Asia and emerging markets.'
Lenovo shares jumped 13 per cent to HK$5.37 at the close of trading yesterday on news of its fiscal third-quarter results and the disposal of its loss-making mobile-phone manufacturing business.
'We believe this will be a breakout year for the Lenovo brand on the world stage,' said Mr Amelio, noting it would mark the first time the company will pursue an IBM brand-free global marketing campaign since acquiring IBM's personal computer division in 2005.
The company has started selling consumer-oriented personal computers to international markets this month, with its new IdeaPad notebook and IdeaCentre desktop systems, in line with the big marketing splash related to the Beijing Olympics this year.
Mr Amelio also said new Intel processor-based enterprise servers targeted at small and medium-sized businesses would be available worldwide by the end of the year.
Group chairman Yang Yuanqing said gains achieved in the quarter were 'a direct result of the improvements to our competitiveness', which included restructuring initiatives in March last year and in 2006.
A report from Citigroup predicted Lenovo would continue to outperform the global PC market 'due to its larger emerging market exposure', particularly on the mainland where the group 'makes 60 to 70 per cent of its operating profits on higher margins'.
'Fundamentally, we believe that Lenovo will be the least affected leading PC maker in the event of a United States economic recession,' said Joseph Ho, an analyst at Daiwa Institute of Research.
He said Hewlett-Packard, Dell, Toshiba and Acer, which acquired United States computer maker Gateway, had more exposure in the US.
In the three months to December, Lenovo increased its lead over aggressive US rivals HP and Dell on the mainland by increasing market share to a three-year high of 29 per cent.
Business on the mainland accounted for 40 per cent of Lenovo's total sales in the quarter.
