Lenovo profit beats forecasts thanks to smartphone sales

Lenovo has seen rapid growth in emerging markets

Technology group Lenovo has posted a better-than-expected profit after sales in its smartphone division more than doubled.

Net profit was $253m (£168m) in the three months to December, compared to analyst forecasts of a $200m profit.

Revenue rose 31% to $14.1bn, which was also higher than forecasts for $13.7bn in sales.

The company bought Motorola and IBM's low-end server unit last year in a bid to diversify beyond the PC business.

Lenovo's chairman and chief executive Yuanqing Yang said the firm was at the "starting line of a new race" due to the two multi-billion dollar acquisitions.

"The results show that we have the right strategy, we made the right acquisitions and we executed well globally, so I am confident we are ready to win," Mr Yang said in a statement.

"Our core PC business maintained its leading position and further improved profitability. The two newly acquired businesses are achieving great momentum in their first quarter of integration. They are definitely becoming our growth engines."

Shares rose more than 8% in Hong Kong following its earnings announcement.

Core business

Lenovo is the world's biggest PC maker and its latest results show increased dominance in what has been a shrinking market.

The Beijing-based company said it held a record 20% of the PC market during the quarter, with sales of $9.15bn.

It also saw shipments rise 5% compared to a 3% decline in the broader industry, due to growth in Eastern Europe.

However, it was Lenovo's smartphone division that showed the most impressive results, with total sales rising 109% to $3.39bn in the quarter.

The US brand sold more than 10 million handsets during the quarter, giving the combined firm a 6.6% market share, it said.

Lenovo's purchase of Motorola has made it the world's third-largest smartphone maker.