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Lenovo sees profits jump

by on18 August 2016


But mobile phones not what they are cracked up to be

China's Lenovo saw its first quarter profit jump nearly two thirds but its mobile arm lost money again as a $3 billion bet on buying Motorola to diversify has yet to pay off.

Lenovo's net profit climbed 64 percent to $173 million for the quarter ended June compared with a year earlier, when profit was hit by restructuring costs. This quarter saw a $132 million gain from the sale of a Beijing office property which sent profit well beyond the $130.1 million average estimate of analysts.

But the outfit was less happy with its handset business. Lenovo bought Motorola in 2014 to reduce exposure to a shrinking global PC market. But it turned out that mobile market was not as strong as many predicted.  Lenovo saw global smartphone shipments plunge 31 percent in the quarter from a year ago. It said the mobile division - housing Motorola and other operations - won't make a profit before the fiscal half beginning October 2017.

Chairman and Chief Executive Officer Yang Yuanqing is confident that it can turn Motorola around by pushing it into the more lucrative premium smartphone sector while ramping up marketing expenses.

Lenovo previously said it expected a turnaround by this quarter in Motorola's mobile operations, Yang said Motorola "has made a lot of progress", though the company declined to give numbers for the operations, saying they're now merged into its overall mobile business.

The company said its share of the global PC market grew over the quarter as it performed "slightly better than expected" thanks to a stronger performance in mature markets. PC shipments fell 2 percent year-on-year, compared with a 4 percent decline in the broader industry.

Across the whole company, first-quarter revenue dropped 6 percent to $10.05 billion from a year earlier, beating an average of $9.63 billion estimated by analysts.

 

Last modified on 20 August 2016
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