HONG KONG (REUTERS) - China's Lenovo Group, the world's biggest personal computer (PC) maker, said on Thursday (Aug 18) that its first-quarter net profit rose 64 per cent, beating estimates as solid PC sales offset tepid smartphone demand.
Lenovo said in a filing that net profit grew to US$173 million for the quarter ended June from US$105 million in the same period a year earlier. That was more than the US$130.1 million average of analysts polled by Thomson Reuters SmartEstimates.
First-quarter revenue dropped 6 per cent to US$10.05 billion from a year earlier, compared with an average of US$9.63 billion estimated by analysts.
"The PC market performed slightly better than expected due to stronger performance in mature markets," the company's chairman and chief executive officer Yang Yuanqing wrote in the stock exchange statement. "Competition in the China smartphone market remained very keen while demand remained soft due to the slow economy."
Lenovo consolidated its hold on the slowing PC market during the quarter. PC shipments fell 2 per cent year-on-year, compared with a 4 per cent decline in the broader industry.
Like peer Xiaomi Inc, Lenovo has been focusing on diversifying away from intense competition in low-margin devices in China - still the world's largest handset market but affected by the slowing Chinese economy.
Lenovo had an "urgent need to formulate a sustainable strategy in smartphones, particularly in China," Jefferies analyst Ken Hui wrote in a note prior to the results, citing competition from domestic rivals with extensive sales networks in China such as Huawei Technologies Co Ltd.
According to researcher TrendForce, Lenovo had a 4.5 per cent share of the global smartphone market in April-June, leaving it a distant seventh after top player Samsung Electronics' 24 per cent and Apple's 15 per cent.