Lenovo's PC market share rises, makes inroads in smartphone business

China's Lenovo Group, on track to become the world's top maker of personal computers, reported a record quarterly profit, up by a third from a year earlier,

Lenovo Group, on track to become the world's top maker of personal computers, reported a record quarterly profit, up by a third from a year earlier, as it gained more share in the PC market and made inroads in the smartphone business.

The ThinkPad maker, also China's second-biggest smartphone vendor, said on Wednesday net profit in its October-December third quarter had risen to US$204.9 million. That beat the average estimate of $178.4m in a poll of 11 analysts and exceeded its previous record of around $172m in the three months ended December 2007.

Lenovo has rapidly gained market share in the PC sector on the back of acquisitions over the past few years. The company trails Hewlett Packard by a slim margin in PC shipments, according to technology research group IDC.

As PC demand growth slows, Lenovo has been diversifying into the mobile device sector to tap robust demand for smartphones and tablets, particularly at home in China, the world's biggest market for mobile phones and personal computers.

"In my opinion, Lenovo's strategy in mobile devices is that it will focus initially on the overseas markets that it's most familiar with and this includes emerging markets," Eve Jung, an analyst at Nomura Equity Research.

"However, it will face challenges in the sector as companies like Acer and Asustek roll out cheaper tablet PC models to aggressively target markets, such as China, which is Lenovo's traditional stronghold," she said.

In the third quarter, overall revenue grew 12 per cent from a year earlier to $9.4 billion, with the bulk coming from its PC business.

About a tenth of its revenues were from its mobile internet and digital home business - mainly consisting of its smartphone sales in China, which jumped 77 per cent to $998m.

The company said its China smartphone business achieved profitability for the first time during the quarter.

* Reuters