Lenovo reported its earnings on Wednesday and its net profit in the October – December fiscal quarter was $204.9 million, up by a third from a year earlier. Analysts had expected Lenovo to post $178 million net profit, but the outfit outperformed even the most optimistic forecasts. In fact, Lenovo exceeded its previous record of $172, posted back in 2007, before the credit crunch and PC slump.
The company is still trailing Hewlett Packard in terms of global PC market share, but according to IDC, it is narrowing the gap. What’s more, Lenovo is diversifying beyond the PC market and its smartphones and tablets are making their presence felt in China. The same can’t be said of HP, which apparently still thinks it can grow its business by peddling toners and overpriced printer ink.
Although Lenovo phones are somewhat of an oddity in western markets, Lenovo’s mobile business saw its revenues jump 77 percent in the Chinese market, almost hitting the $1 billion mark. So although western consumers don’t see them, Lenovo phones seem to be doing rather well. The company’s mobile internet and digital home business accounted for about one tenth of revenues during quarter and Lenovo claims its China smartphone business reached profitability for the first time.
Lenovo’s core business is doing fine and its focus on mobile seems to be paying off, at least in China. Lenovo’s Android tablets aren’t big sellers in the west, but they aren’t lemons, either. What’s more, Lenovo is starting to offer an increasing number of high-end ThinkPad tablets on top of its bland Android offerings. It is also in a good position to capitalize on Windows 8 tablets and hybrids. Although the Android tablet market will probably remain dominated by Asus and Samsung, Lenovo might carve out a high-margin niche in Windows 8, if it plays its cards right.