Sat, Feb 11, 2012 - Page 11 News List

Lenovo Q4 profit up 54% as market share hits high

HARD DRIVE COSTS:The PC maker said flooding in Thailand last year shut down production at hard drive factories, raising the cost of each drive by US$5-US$10


Lenovo Group Ltd (聯想), the world’s second-biggest personal computer maker, said on Thursday that quarterly profit grew by more than half, but warned hard drive costs would remain high amid a global shortage.

The company said it is confident of closing in on the top spot in PC sales, as it reported strong sales growth across all major markets, even as it focuses more attention on the burgeoning smartphone and mobile Internet market.

Net income rose to US$153 million, or US$0.146 per share, in the period between October and December last year, which is the company’s third fiscal quarter. That’s up 54 percent from the same period the previous year.

Sales jumped 44 percent to a record US$8.4 billion as its share of the global personal computer market hit a high of 14 percent.

Lenovo posted 30 percent sales growth in China, which accounts for about two-fifths of total sales. Sales in Africa, Latin America and other emerging markets rose 13 percent.

Strongest growth came in developed markets, including Western Europe and North America, where sales zoomed up 81 percent. They were helped partly by new a joint venture with NEC Corp in Japan and the purchase of Germany’s Medion AG, a maker of multimedia products and consumer electronics. Both deals were completed in July last year.

The company, which is based in Beijing and has its US headquarters in Raleigh, North Carolina, said market share in China, the world’s biggest PC market, hit a high of 35.3 percent.

Lenovo, which acquired IBM Corp’s PC unit in 2005, overtook Dell Inc in the third quarter of last year to become the second-largest PC vendor by shipments worldwide, according to both International Data Corp and Gartner.

“We are closing the gap with No. 1 [held by Hewlett-Packard Co]”, Lenovo chairman Yang Yuanqing (楊元慶) said.

Gross profit margins dipped in the quarter because of higher prices for hard disk drives. Flooding in Thailand last year shut down production at a swath of hard drive factories, crimping global supply.

The shortage is adding about US$5 to US$10 to the cost of each hard drive, Yang said.

Chief financial officer Wong Wai Ming (黃偉明) said the impact of the floods on hard-drive production would “likely continue to affect global PC supply” into the next quarter and hard drive costs “will continue to stay high in the short term.”

Worldwide, Lenovo’s PC shipments rose 37 percent even as the global personal computer industry struggled. However, Yang signaled that the company is starting to look past that market.

“We are already thinking ahead and preparing for the next steps past the traditional PC,” he said.

Separately, executives rejected accusations by Taiwan-based rival Acer Inc (宏碁) that its former chief executive Gianfranco Lanci breached a noncompete clause when he left Acer last year and went to work for Lenovo. Acer is suing Lanci.

Yang said the company would not comment on the lawsuit filed in Italy, except to say that Lanci’s hiring “meets all legal requirements.”

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