By Juro Osawa
Personal-computer maker Lenovo Group Ltd.'s net profit jumped
25% in its fiscal fourth quarter, helped by higher profit margins
and stronger smartphone sales in China and the Asian-Pacific
region.
The Chinese company, which last year overtook Hewlett-Packard
Co. as the world's largest PC maker by shipment volume, said its
net profit in the quarter through March rose to $158 million from
$127 million a year earlier. Revenue for the quarter rose 19%to
$9.36 billion from $7.83 billion.
"The earnings are in line with expectations and no surprises,"
said Sanford C. Bernstein analyst Alberto Moel, shortly after
Lenovo announced the results. Beyond the financial results,
investors are waiting for updates on Lenovo's planned acquisitions
of two major U.S. businesses: Google Inc.'s Motorola Mobility
handset business and International Business Machines Corp.'s
low-end computer server unit.
Analysts are paying attention to discussions about U.S.
regulatory approvals for the two deals, as well as Motorola's
recovery from last year's hefty losses, Mr. Moel said. In late
January, Lenovo said it would buy Motorola for $2.91 billion, just
a week after it announced plans to separately buy IBM's server
business for $2.3 billion.
In the quarter through March, Lenovo generated 33% of its
revenue from China. Its operating margin in China rose to 5.5%, up
0.8 percentage point from a year earlier. Its operating margin in
the Asian-Pacific region excluding China, which accounted for 19%
of Lenovo's revenue in the quarter, also improved to 2.7%, up 1.3
percentage points.
The results boosted Lenovo's share price, which was trading 2.5%
higher at 9.36 Hong Kong dollars ($1.21) on the Hong Kong Stock
Exchange, outperforming the benchmark index that was flat.
Lenovo, which sells not only PCs but also mobile devices, said
its smartphone shipments rose 59% in the quarter. In China, Lenovo
is the second largest smartphone vendor behind Samsung Electronics
Co.
For the full year through March 31, Lenovo's net profit rose to
$817 million from $635 million a year earlier, while revenue
increased 14% to $38.71 billion from $33.87 billion. China
accounted for 38% of the company's total revenue and most of its
profit. The China business generated an operating profit of $788
million, accounting for 75% of Lenovo's overall operating profit of
$1.05 billion for the fiscal year.
Write to Juro Osawa at juro.osawa@wsj.com
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