PC maker Lenovo returns to profit in third-quarter on strong performance across business groups

HONG KONG (Reuters) – Chinese PC maker Lenovo Group Ltd said on Thursday it swung to a net profit in the three months through December, beating market expectations, due to strong performance across its major business groups.

FILE PHOTO: A Lenovo ultrabook and a tablet are displayed during a news conference in Hong Kong, China May 21, 2015. REUTERS/Bobby Yip/File Photo

Profit for the quarter reached $233 million, versus a loss of $289 million in the same period a year earlier when the world’s largest personal computer (PC) maker by shipments took a one-off hit due to U.S. tax reform.

The result was ahead of the $207 million average of 10 analyst estimates compiled by Refinitiv.

Revenue rose 8.5 percent to $14.04 billion, the highest in four years and in line with analyst estimates.

Lenovo’s mobile phone business also recorded a pre-tax profit – of $3 million – for the first time since it bought Motorola in 2014 for $2.9 billion. Revenue nevertheless declined 20 percent, with Lenovo attributing the fall to a strategy of focusing on core markets.

The firm said revenue in its PC and smart devices business rose 12 percent, and that its global PC market share was 24.6 percent.

Industry tracker Gartner last month said worldwide PC shipments fell 4.3 percent in the December quarter and 1.3 percent in 2018, but that the biggest three vendors – Lenovo, HP Inc and Dell Inc – expanded their market share in the quarter to 63 percent of total shipments from 59 percent.

Loss in Lenovo’s data center business narrowed to $55 million from $86 million a year earlier, while revenue grew 31 percent.

Lenovo, which bought IBM Corp’s personal computer and server businesses, is dual-headquartered in Beijing in China and North Carolina in the United States, with manufacturing in both countries.

It said in its earnings statement that it was “well prepared for geographic political and macroeconomic volatility” with its worldwide manufacturing capabilities.

Reporting by Sijia Jiang; Editing by Christopher Cushing