Lenovo Quarterly Revenue Jumps 31 Percent on Smartphone Sales

Lenovo Group Ltd, the world's leading PC maker, said on Tuesday its third-quarter revenue rose 31 percent to $14.1 billion (roughly Rs. 86,899 crores), beating investor expectations, as its smartphone division sales more than doubled.

The company said net profit was $253 million (roughly Rs. 1,559 crores), down from $265 million (roughly Rs. 1,633 crores) a year prior due to ballooning operating expenses associated with two multi-billion dollar acquisitions completed in recent months.

The results beat expectations of $13.71 billion (roughly Rs. 84,495 crores) in revenue and $200 million (roughly Rs. 1,232 crores) in net profit, according to analysts polled by Thomson Reuters SmartEstimates.

The Beijing-based company acquired American phone brand Motorola for $2.91 billion (roughly Rs. 17,934 crores) and IBM's low-end server unit for $2.1 billion (roughly Rs. 12,942 crores) to expand its business beyond the declining PC market.

Lenovo, which closed the Motorola purchase in late October and included two months of Motorola's results in this quarter's earnings, touted the American handset brand's early performance and said it achieved "hyper growth" in emerging markets outside China.

Motorola sold more than 10 million handsets during the quarter, a company record, and its purchase by Lenovo made the combined company the world No. 3 smartphone maker with 6.6 percent market share, Lenovo said.

Total sales from the mobile division rose 109 percent to $3.39 billion (roughly Rs. 20,892 crores), or a quarter of the company's sales.

Lenovo continued to consolidate its hold on the shrinking PC market, reaching a record 20 percent share during the quarter with sales of $9.15 billion (roughly Rs. 56,392 crores). Shipments rose 5 percent compared to a 3 percent decline in the broader industry, with growth particularly strong in Eastern Europe, Lenovo said.

© Thomson Reuters 2015