Lenovo in 'attack' mode after record market share gains

Technology major primed for second-half offensive after record market share gains

PUBLISHED : Thursday, 14 August, 2014, 10:28am
UPDATED : Friday, 15 August, 2014, 12:45am

Chinese technology giant Lenovo is gearing up to launch its new generation of smart devices, after posting strong earnings in the quarter to June on record global market share gains in personal computers, smartphones and media tablets.

"We will attack these product categories in the second half [of this year]," Lenovo chairman and chief executive Yang Yuanqing said yesterday in a conference call from New York City.

Yang said the company will bring more innovative consumer and enterprise products to market once its US$2.91 billion takeover of Google's Motorola Mobility operation and the US$2.3 billion purchase of International Business Machines' low-end server division are cleared by regulators. It expected to close those deals later this year.

Lenovo, the world's largest supplier of personal computers, reported yesterday a 23 per cent jump in net profit in its fiscal first quarter to June 30 to US$213.5 million, up from US$173.9 million a year earlier, to beat the US$197.3 million average of analysts' estimates compiled by Bloomberg.

Lenovo seized a record-high global market share of 19.6 per cent in personal computers on shipments of 14.5 million units in the quarter.

Yang pointed out that the company had sold more smartphones than personal computers for the first time during the period. It shipped 15.8 million smartphones to rank fourth worldwide, with a 5.4 per cent market share, and surpassed Samsung Electronics to become the No1 supplier on the mainland.

In the tablet market, Lenovo became the world's third-largest supplier, selling 2.3 million devices in the quarter. Total revenue increased 18 per cent to US$10.4 billion, from US$8.8 billion the previous year.

"Our business results have never been so balanced," said Yang, citing Lenovo's steady growth in international markets. It operates in more than 160 countries. The mainland accounted for 36 per cent of its revenue in the quarter, compared with about 48 per cent three years ago.

Wong Wai-ming, Lenovo's chief financial officer, said the personal computer industry still offered "plenty of opportunities for profitable growth" based on strong corporate upgrades and high demand for laptops. Sales of laptops made up 49 per cent of the company's revenue in the quarter to June.

It is also keen to tap the 4G mobile opportunities on the mainland, while expanding aggressively in emerging markets.

Kirk Yang, the head of technology hardware research for Asia, excluding Japan, at Barclays, predicted Lenovo to continue gaining market share in personal computers, especially in the United States and in its Europe, Middle East and Africa geographic market.

"Its smartphone shipment momentum is likely to pick up in the second half, given a number of new 4G models to be launched," the Barclays analyst said.

Analysts at CCB International Securities projected Lenovo would ship 60 million smartphones and 16 million tablets this year.