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Thursday, 15 August 2013 08:20

Lenovo makes shedloads more cash

Written by Nick Farrell

Recession, what recession?

While analysts claim that tablets have replaced PCs and other hardware makers are suffering, Lenovo is has recorded a forecast-beating 23 percent jump in profits. The result is the company’s second-best quarterly earnings figures and some of that is thanks to its push into smartphones and tablets.

Lenovo sped up a move into mobile devices and is the second largest smartphone vendor in China. It is also expanding into other emerging economies and has said it will start selling phones in the United States, perhaps this year. Lenovo, which toppled Hewlett-Packard Co in PC rankings this year, posted a net profit of $174 million in the quarter ended June, beating a consensus estimate of $166.0 million.

As sales of its LePhones and tablet PCs gain traction, margins are expected to improve and revenue from its mobile Internet and digital home (MIDH) unit is set to rise to 25 percent in its fiscal year ended March 2015 from 16 percent in the year ended March 2013, analysts have said.

Overall quarterly revenue for the ThinkPad maker rose 9.7 percent to $8.8 billion. Its gross profit margin for the quarter was up 0.5 percentage points from 13.1 percent a year earlier, it said in a statement on the Hong Kong stock exchange. Lenovo quickly gained market share in PCs on the back of a string of acquisitions and now it's developing its mobile business at an impressive pace.

Nick Farrell

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