Lenovo Q2 profit up 12.6 percent, slowest growth in 3 years

The Chinese PC giant expanded dominance in key markets, and eyes growth momentum through markets such as Brazil and opportunities from mobile, storage and cloud computing.
Written by Ryan Huang, Contributor

Chinese PC vendor Lenovo has booked a 12.6 percent rise in its second quarter net profit at US$162 million--its weakest pace in nearly three years. This was on the back of a 11.4 percent growth in revenue at US$8.67 billion for the three months ended September.

In a filing [PDF] with the Hong Kong stock exchange, Lenovo pointed out the group continued to outgrow the global industry thanks to the execution of its "protect and attack" strategy--protecting its leadership in China and its worldwide enterprise business while expanding into the consumer segment and emerging markets abroad.

Lenovo's PC shipments grew 17 percent on-year in terms of units, versus the industry decline of 5 percent, it pointed out.

For its first half of the fiscal year, China accounted for 44 percent of the group’s total revenue, where it added 3.1 percentage points in market share for PCs. North America accounted for 15 percent of total revenue, where unit shipments grew by 8 percent year-on-year, and market share increased by 1.5 percentage points.

Last month, Lenovo beat HP to take the crown of top PC maker based on shipments for the third quarter, according to market research firm Gartner.

Lenovo highlights growth in contribution by Mobile Internet and Digital Home (MIDH) in its second quarter results (source: Lenovo presentation slides)

Optimistic over PC market, eyes growth in new segments
The company admitted while worldwide PC demand largely remained challenging due to weakening economic conditions, it was "still optimistic about the future of the PC market and commited to innovation." It added more new tablet-hybrid devices and "other new innovations in its product pipeline" would be launched.

Business will be expanded across the four screens--PC, tablet, smartphone, Smart TV--of devices and into the ecosystem of cloud, services and other applications that make up the PC+ market, Lenovo said.

The company pointed out mobile Internet and digital home (MIDH) was a high growth segment for the group.
Other areas of future growth include the server and storage businesses, supported by its partnership with EMC announced in July and the acquisition of Stoneware, a cloud solution software company.

Accelerating its expansion into the "high growth Brazilian market" will also be on the agenda, with the acquisition of electronics giant CCE in Brazil in September. This is in anticipation of higher domestic PC demand driven by major events such as the World Cup and Olympics, it said.

Last week, Lenovo expanded its smartphone play from its home market for the first time in India, with five Android handsets.

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