Lenovo Group Ltd, world’s top most manufacturers of PCs, has announced a record rise in its profit by 36% for the September quarter. The numbers beat the consensus estimates as the Chinese firm forayed in the smartphones and data servers to compensate for the weak PC sales.
Smartphone, data servers compensating for PC decline
The PC maker told that it will continue to pursue opportunities through acquisitions and at the same time will expand in cloud computing and back-end information storage segment, to fuel further growth. Owing to the declining market of PCs, with 7.6% fall in the September quarter, Lenovo is channelizing into smartphones and servers to generate greater income from alternative channels.
Lenovo’s smartphone shipments increased 78% to 12.3 million units. In May, the company released its K900 model, which has been placed fourth in global smartphone shipments as with the company’s market share rose to 4.7% from 3.7% compared to a year earlier, says a report by IDC.
Yang Yuanging, Lenovo’s chief executive officer, has been able to maintain growth in earnings by increasing the business in mobile devices to compete with companies like Apple Inc (AAPL) and Samsung Electronics, despite a slowdown in the industry.
Record quarterly profit
Lenovo, with a worldwide market share of 17.3% in PCs shipments, reported a net profit of $219.7 million for July to September quarter, which is its highest quarterly profit ever. Including this quarter, the company for three years continuously made a double digit profit surpassing the earlier year profit of $162 million and beating the $199.12 million analyst’s estimate. Lenovo’s revenue for the second quarter was up 13% up to $9.77 billion beating the $9.41 billion estimate of 18 analysts, compiled by Bloomberg.
Lenovo’s profit making business in China has compensated for the declining operating margin in America including North America and South America. Further, the company’s investment in Brazil, by acquiring a local electronics maker last year, has affected the overall margin for the region. Company told in a statement.
Lenovo, which has its headquarters in Beijing and Morrisville, North Carolina, saw a rise in its share to 1.9% on the Honk Kong exchange, the stock climbed to around 22% this year beating the 1% gain by Hang Seng Index benchmark.