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Lenovo has advanced its position in smartphones after completing the acquisition of Motorola Mobility.

PC kingpin Lenovo eyes smartphone, server crowns

PC king is ready to challenge Samsung and Apple for mobile domination while the firm is targeting Hewlett-Packard and Dell in the x86 market

Lenovo

Unfazed by near-term challenges, computer giant Lenovo Group is looking to unseat the global market leaders in smartphones and low-end servers as the company taps more growth outside the mainland.

"We are now No 3 in both businesses, but we are not satisfied. We will replicate our success in PCs by outgrowing the market to challenge the top two [in those industries]," chairman and chief executive Yang Yuanqing said yesterday.

Lenovo, the world's largest supplier of personal computers, has advanced its position in smartphones and low-end servers after completing the acquisition of Motorola Mobility and International Business Machines' x86 server division - its two biggest deals.

Throwing down the gauntlet to rivals Samsung Electronics and Apple in the smartphone industry, as well as Hewlett-Packard and Dell in the server market, could well help Lenovo sharpen its focus after posting its weakest year-on-year sales growth in the past six quarters.

Revenue for Lenovo's fiscal second quarter to September grew a modest 7 per cent to US$10.47 billion, from US$9.77 billion a year earlier, on weaker performance in the Americas and in mainland China, where its smartphone sales declined.

That missed market analysts' consensus revenue estimate of US$11.26 billion.

In the previous five quarters to June, Lenovo recorded double-digit year-on-year sales growth as high as 19 per cent.

The firm's net profit rose 19 per cent to US$262 million from US$220 million in the period last year, beating the consensus estimate of US$260 million on strong demand for laptop computers, which made up 52.1 per cent of total revenue, and brisk sales in its Asia-Pacific and Europe, Middle East and Africa markets.

Lenovo's shares, however, fell as low as HK$10.62 yesterday on its earnings news.

The stock closed at HK$10.78, down 5.11 per cent.

Kirk Yang, Barclays' head of technology hardware research for Asia excluding Japan, forecast short-term share price volatility, but had an "overweight" rating on the stock. "We believe Lenovo is one of the few companies that can outgrow the market in the expected weak global technology demand next year," he said.

Lenovo said yesterday Yahoo co-founder Jerry Yang would join its board as an independent non-executive director. He has served as a "board observer" at the company since February last year.

Former Yahoo chief executive Yang was behind that firm's US$1 billion investment in Alibaba, now the world's largest e-commerce services provider, in 2005.

This article appeared in the South China Morning Post print edition as: Lenovo eyes phone, server lead
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