The largest PC manufacturer by shipments in the world – Lenovo Group Ltd – said that its profit during the second financial quarter surpassed analysts forecasts as it gained a larger share in the desktop computer and smartphone markets. However, the Chinese company posted its slowest sales growth in six quarters, overtaken in the global smartphone market by Chinese competitor Xiaomi Corp.
According to Lenovos statement, the companys net income increased by 19% from $219.7 million a year ago and reached $262.1 million in the quarter that ended in September 2014. In comparison, analysts had projected a net profit of $259.8 million.
However, revenue increased by 7.2% from $9.77 billion to $10.48 billion, the smallest gain since the three months through March 2013, trailing analysts projections for $11.3 billion.
The company managed to increase its global smartphone shipments by 38% to 16.9 million units over the quarter. The market share of Lenovo also increased from 4.7% a year ago to 5.2%. The sales of Motorola devices were excluded from the figures.
Lenovo has recently been facing a decline in the global PC industry, which is why it has been focused on retaining growth by expanding its reach on the market, offering new products and betting on acquisitions. Under the lead of Chief Executive Officer Yang Yuanquing, the company has become more oriented towards computer servers and smartphones.
Although Lenovo has been seeking consolidation of its market share through acquisitions, its earnings may be negatively affected by integration expenses and the operating loss of the recently purchased Motorola Mobility.
Last week the company shared that the acquisition of Motorola Mobility from Google Inc. was completed. The price of the transaction is estimated to $2.91 billion. In October Lenovo also finalized a takeover deal with International Business Machines Corp. over the latters low-end server division at the price of $2.1 billion.
One of the analysts, who work at Canalys – Chris Jones – commented in a report dated November 4th, which was cited by Bloomberg: “If its performance is considered in the light of its completed Motorola Mobility acquisition, the combined share is stronger still. Assuming it can consolidate and grow from its current position, Lenovo, with Motorola, is well placed to mount a real challenge to Apple as the worldwide No. 2 vendor next year.”
Lenovo Group Ltd fell by 5.11% on Thursday in Hong Kong to close at HK$10.78 per share, marking a one-year change of +28.18% and valuing the company at HK$119.75 billion.
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