Lenovo Q3 profit hits record $205M, China smartphone biz profitable

Chinese PC giant posts record profit and sales for its third quarter, with China continuing to be the main contributor of overall sales at 43 percent aided by a smartphone business turning profits for the first time.

Chinese PC giant Lenovo said its third quarter ended December 31, 2012, was its best ever, with record numbers for both sales and profit at US$9.4 billion and US$205 million, respectively.

The company said in a statement Wednesday the US$9.4 billion in revenue was a 12 percent increase from the year before, while third-quarter profit leaped 34 percent year on year to reach US$205 million.

Gross profit for the third quarter increased 15 percent year on year to US$1.1 billion, while operating profit climbed 26 percent to US$243 million.

Lenovo's Q3 profit jumped 34 percent year on year to reach US$205 million.(Credit: Lenovo)

The company said it has been the fastest-growing PC company for 13 consecutive quarters. In its "best quarter ever," it continued to outgrow the market in all geographies with record sales, pre-tax income, and earnings, becoming the world's leading PC maker and emerging global leader in " PC Plus " devices, such as smartphones, tablets, and smart TVs, it said.

In China, Lenovo saw US$4.1 billion in consolidated sales in the third fiscal quarter, an increase of 17 percent year on year. Domestic sales was also the biggest contributor to overall sales with 43 percent.

In Asia-Pacific and Latin America, consolidated sales was US$1.7 billion, constituting 18 percent of total worldwide sales.

China smartphone biz turns profitable

The stellar performance was attributed to its "Protect and Attack" strategy, which was introduced four years ago. It refers to protecting the two profitable areas--global commercial PC and China businesses--while attacking the three high-growth opportunities, which are emerging markets, global consumer products, and PC Plus products.

The "Attack" businesses contributed half of the company's revenues, compared to 32 percent when the strategy was first launched.

Lenovo added that its smartphone business in China was profitable for the first time.

"With the strong execution of our 'Protect and Attack' strategy, Lenovo has not only achieved record revenue, profit, and global PC market share last quarter, but also our smartphone and tablet businesses have delivered hyper growth. Even more, our worldwide tablet and China smartphone businesses have become profitable," said Yang Yuanqing, chairman and CEO, Lenovo Group, in the statement.

"As we continue into the PC Plus era, Lenovo has already laid a solid foundation. Our new organization will provide the structure to elevate our diversified business and drive it to the next level. We are confident that we can win through differentiation and will be the innovation leader in the PC Plus era."

At the start of this year, Lenovo restructured the company into two groups --the Lenovo Business Group and Think Business Group--in a bid to target mainstream and high-end segments.

In its statement, Lenovo said it is twice as large today and more diverse than when it had its previous structure. "Today the company has built strong consumer, mobile, and emerging markets businesses globally, so the change was proactively initiated to drive continued performance across all of these businesses, stay ahead of consumer demands, while driving speed, agility, and innovation," it said.