The third quarter for Beijing-based Lenovo Group Ltd (Lenovo) has not been great with profits that didn’t meet analyst estimates and low smartphone sale that cramped that confidence of its investors.
Lenovo’s earnings came at a time when competition in the smartphone market in China was very tight with lots of rivals that include Xiaomi Inc. holding the record of the world’s 3rd top handset maker. This is also the time when the firm pulled ahead in the personal computer industry.
Right now, the company holds 20% market share for personal computers and it had its lead over Hewlett-Packard Co extended.
Lenovo has logged an increase in its sales for desktop computers by 6.4% and laptops by 0.9% for the third quarter which contributed to the 7% or $10 billion increase in its profits. Compared to the experts’ estimates of $11.35 billion, the company was unsuccessful in beating it by over 1 billion dollars.
The market for personal computers has been dwindling not only for Lenovo but for other players as well with the introduction of smartphones and tablet computers.
Last week, the Beijing-based company closed a deal with Motorola for $2.91 billion. The company’s co-founder Jerry Yang said on a conference call that it will prioritize growth of sales for Motorola and that he would not look at cutting overheads for now.
Lenovo presumes that Motorola will turn a profit for the computer in the next 4-6 quarters.