Motorola purchase boosts Lenovo stock
Print Edition
SHARES in Lenovo Group Ltd surged more than 7 percent in Hong Kong yesterday after it posted better-than-expected profits in last year’s final quarter following its acquisition of Motorola Mobility.
Lenovo’s net profits in last year’s fourth quarter reached US$253 million, 5 percent down from the previous year go but higher than analysts’ estimates of US$182.4 million.
The revenue of the world’s top personal computer maker rose 31 percent to hit US$14.1 billion, compared to a forecast of US$10.8 billion.
“We are at the starting line of a new race, but the results show that we have the right strategy,” Yang Yuanqing, Lenovo’s chief executive said in a statement.
After paying US$5 billion for Motorola Mobility from Google and the X86 chip business from IBM last year, Lenovo’s revenue structure had become more diversified and healthy, analysts said.
The PC business, facing an industry-wide slowdown because of competition from smartphones and tablets, accounted for 65 percent of Lenovo’s total income, compared to 81 percent a year ago. Mobile devices contributed 24 percent of revenue while other business, including servers and cloud computing services, contributed 9 percent in the quarter.
Lenovo’s PC sales grew 5 percent in the quarter to help the firm maintain its world No. 1 position with a market share of 20 percent.
Motorola, which returned to the domestic market by debuting three new phones last month, delivered more than 10 million units in the quarter, almost double the volume in the same period a year earlier. Pre-orders sales of Motorola’s new phones hit a million units, Yang said.
Lenovo shares traded 7.27 percent in Hong Kong to close at HK$10.92 (US$1.76), compared to a 0.25 percent gain in the whole market.
The purchase of Motorola helped Lenovo boost global smartphone sales by 78 percent in the quarter to 24.7 million units, replacing Xiaomi as the world’s No. 3 smartphone vendor behind Samsung and Apple. Its market share expanded to 6.6 percent, from 4.8 percent a year earlier, said US researcher International Data Corp.
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