Lenovo Group first-quarter profit up 23%

China's Lenovo Group said first-quarter profit increased 23 per cent, beating estimates, as a surge in smartphone sales helped the world's biggest personal computer maker rapidly emerge as a major player in mobile technology.

According to Beijing-based Lenovo, net income was up at $214 million in the three months through June from $174 million in the same period a year earlier, the opening quarter of its fiscal year.

The hardware company sought to diversify from its shrinking PC market. It is buying IBM's server unit and the Motorola handset brand in deals worth over $5 billion (See: Lenovo expects to complete IBM, Google deals by year-end)

According to Lenovo's chief executive Yang Yuanqing, he saw potential for more smartphone sales growth outside China - though he would not chase it at the expense of profit margins.

The company posted handset shipments growth at 39 per cent, helped by strong sales in China. The company had displaced South Korean giant Samsung Electronics Co Ltd over the past year to emerge the No 1 smartphone seller in China, as per recent estimates by IDC.

However, it had a close rival in handset maker Xiaomi, the three-year old Beijing-based company that was fast increasing its smartphone market share on razor-thin margins.

For the three months to June, net profit was up at $214 million, while revenue in the same quarter increased 18 per cent from the previous year to $10.4 billion, BBC reported.

Lenovo's core business - personal computers made up 49 per cent of total revenue in the quarter to June.

Laptop sales increased 12 per cent in the period, with the industry in downturn.

The company said the PC industry saw a 3.7 per cent decline in laptop shipments for the three months to June, as against the same period last year.

Going by the latest figures, Lenovo had been able to retain its status as market leader for PCs, with a higher global market share of nearly 20 per cent, as against last year.

In a statement accompanying the earnings release, Lenovo chairman Yuanqing said, this had been a quarter of milestones for Lenovo - record PC share, a number three ranking in worldwide tablets for the first time and an even stronger number four global smartphone position.

He added, as the PC industry recovered, the smartphone market continued its shift from premium to mainstream, and Lenovo's acquisitions of Motorola Mobility and IBM x86 proceeded towards completion, the company saw even more opportunity to keep growing rapidly.