Lenovo eyes phone and tablet growth

Combined smartphone and tablet sales outstrip personal computer volumes for the first time

PUBLISHED : Thursday, 15 August, 2013, 8:08am
UPDATED : Friday, 16 August, 2013, 2:16am

Lenovo, which posted quarterly earnings that beat analysts' estimates, will step up investments and international expansion for its smartphone and media tablet business.

Chairman and chief executive Yang Yuanqing said the strategy would build on the growth momentum in its fiscal first-quarter ended June 30, when Lenovo's smartphone and tablet sales volume surpassed personal computer sales for the first time.

Combined smartphone and tablet sales volume last quarter reached 12.9 million units and made up 14 per cent of Lenovo's total revenue. Personal computer shipments totalled 12.6 million units but contributed about 80 per cent of overall revenue.

"Lenovo is transforming from a PC company into a PC-Plus company at full speed," Yang said on a conference call yesterday.

He also expects continued strong smartphone and media tablet sales on the mainland to offset likely short-term weakness in domestic personal computer sales. "For the China PC market, we see further decline probably this quarter and next quarter," he said.

But he added that "sustained growth momentum in sales of smartphone and tablet sales" would help drive further growth for Lenovo, which unseated Hewlett-Packard last quarter to become the world's largest supplier of personal computers.

Mainland China, where Lenovo derived 42 per cent of overall sales last quarter, is the world's biggest market for both smartphones and personal computers.

Lenovo yesterday reported a 23 per cent year-on-year rise in net profit to US$174 million in the three months to June 30, on the back of growth in all its geographic markets as smartphone and tablet sales outstripped those of personal computers.

Its earnings beat the average of US$167 million in profit for the quarter based on 10 analysts' estimates compiled by Bloomberg.

Revenue climbed 10 per cent to US$8.7 billion from the previous year. This turnover was higher than Barclays' estimate of US$8.5 billion.

Lenovo chief financial officer Wong Wai-ming said nearly 80 per cent of the company's smartphone and tablet sales in the last quarter were generated from the mainland. He declined to comment on speculation about plans to acquire BlackBerry.

Shares of Lenovo advanced 2.12 per cent to close at HK$7.72 yesterday.