Soaring profit puts HP in Lenovo's sights
Boosted by its record earnings and global market share, Lenovo plans to put the development of its fledgling mobile-internet-devices business on a fast track this year while continuing to grow faster than computer industry leader Hewlett-Packard.
'We are already thinking ahead and preparing the next step beyond the traditional PC,' Lenovo chairman and CEO Yang Yuanqing said yesterday. 'We believe [the company's] mobile internet [business] will become our new growth engine.'
Lenovo, the world's second largest supplier of personal computers, reported a 54 per cent increase in net profit in its fiscal third quarter which ended on December 31. Profit rose to US$153 million, from US$99.7 million a year earlier, on the back of balanced growth across all its geographic markets, high demand for computers in the business sector, and its acquisitions in Japan and Germany.
Revenue in the quarter to December jumped 44.8 per cent to a record US$8.4 billion, up from US$5.8 billion the previous year, as its global market share jumped to a new high of 14 per cent. Lenovo's market share on the mainland also grew to a record figure of more than 35 per cent.
Wong Wai-ming, the company's chief financial officer, said sales in its mature markets geographic business advanced 81 per cent year on year to US$3.6 billion and accounted for 43 per cent of worldwide sales. These markets include large global corporate accounts, Australia, New Zealand, Japan and countries in North America and western Europe.
Market research firm IDC estimated that Lenovo increased its shipments in the quarter to December by 36.8 per cent to a record volume of 13 million units from 9.5 million a year earlier, despite an industry-wide shortage of hard disk drives.
'For the first time, Lenovo became the number one vendor globally in commercial PCs and in consumer desktops,' Yang pointed out.
There was also steady progress in Lenovo's mobile-internet digital home division, which the company established last year to compete in smartphones, media tablets and internet-linked 'smart' televisions. Yang said Lenovo became the mainland's No2 brand of media tablets, adding the firm was also optimistic about its introduction of smart TVs on the mainland in the second quarter this year.
Lenovo's laptop computers, led by its Think-brand notebooks, generated 53 per cent of total product sales last quarter.
The mainland computer giant saw its share price rise 3.84 per cent to finish at HK$6.49 yesterday, its highest close since reaching HK$6.66 on January 4, 2008.
While Lenovo has set its sights on unseating HP as the world's top computer supplier by the end of this year, another strategic investment may be needed for the mainland company to reach that milestone, according to Bernstein Research analyst Alberto Moel. He estimated that Lenovo's personal computer shipments must grow by closer to 30 per cent this year, up from an estimated 15 per cent, for the firm to overtake HP.
Lenovo's share of the computer market on the mainland, its highest so far