Lenovo Q3 Profits Up Despite Flat Sales

Lenovo Group Thursday reported a jump in third-quarter profits, even as its turnover during the period remained flat compared to one year ago.

Lenovo reported a profit attributable to shareholders of US$57.7 million on sales of $4 billion during its fiscal third quarter, which ended on Dec. 31, 2006. That’s a 23 percent increase in profits compared to the same period during the previous fiscal year, when Lenovo reported a profit of $46.8 million on sales of $4 billion, the company said in a filing with the Hong Kong stock exchange.

On a sequential basis, the results show good news for Lenovo. The company saw its profit fall by 53 percent during the first half of its fiscal year—from $91.2 million to $43.1 million—compared to the previous year’s period.

Lenovo’s PC shipments during the quarter increased 8 percent over the previous year, outpacing the industry average, which the company pegged at 7 percent, the filing said.

As usual, China was a strong market for Lenovo, with PC shipments up 19 percent. The company also saw shipments rise by 3 percent in Europe, the Middle East and Africa. But Lenovo’s PC shipments slipped 4 percent in North and South America due to weaker demand from large companies. Shipments fell by 1 percent in the Asia-Pacific region, excluding China, Hong Kong and Taiwan.

About 52 percent of Lenovo’s revenue came from notebook PCs, as unit shipments rose 20 percent over the previous year, Lenovo said in a press statement. Desktop shipments rose 2 percent, contributing 43 percent of the company’s total revenue.

The remainder of Lenovo’s revenue came from the sale of mobile phones, which contributed 4 percent of revenue. Handset shipments fell by 6 percent compared to the previous year, Lenovo said.

-Sumner Lemon, IDG News Service (Singapore Bureau)

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