Lenovo rode a strong PC upgrade cycle in its fiscal second quarter as sales surged more than 35 percent from a year ago. The company's diversification into mobile devices is also starting to pay off as Lenovo became the No. 2 tablet maker in China.
The company reported a second quarter profit of $145 million on revenue of $7.78 billion, up 35.2 percent from a year ago. Lenovo's PC shipments were up 35.8 percent from a year ago.
Yang Yuanqing, Lenovo CEO, said the integration of NEC and Medion went well and noted that the company is "very optimistic about the future of the PC industry." Nevertheless, Lenovo is expanding into mobile devices.
According to Lenovo, the plan going forward consists of defending mature markets and expanding into emerging regions as well as new categories such as mobile devices.
Mobile devices are a small portion of Lenovo's overall sales, 3.6 percent in the second quarter, but represent a lot of future growth. Lenovo touted sales of its A60 entry level smart phone in China and the launch of its Android tablets. Sales figures weren't disclosed.
Other notable points:
- Lenovo's China business delivered $3.2 billion in sales for the second quarter, or 40.8 percent of total revenue. PC shipments jumped 25.8 percent in the third quarter compared to a year earlier.
- Emerging market revenue for the second quarter was $1.3 billion, or 16.6 percent of revenue. Brazil, India, Latin America and Russia, all averaged about a 42 percent jump in units in the second quarter compared to a year ago.
- Mature market revenue was $3.3 billion, or 42.6 percent of Lenovo's revenue.
- Laptops accounted for 57.5 percent of Lenovo's second quarter sales and units were up 35.4 percent from a year ago. Desktops were 34.1 percent of sales.
Separately, Yuanqing also became chairman. Founder Liu Chuanzhi will become honorary chairman. Chuanzhi will focus on growing Legend Holdings, parent of Lenovo, with the goal of launching an IPO in between 2014 and 2016.