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Lenovo turns profitable as notebook sales rise, desktops fall

Lenovo's chairman now a VC

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RESEARCH TRIANGLE PARK, N.C. — Lenovo reported Thursday that it got back into the black during its second quarter that ended Sept. 30, posting a profit of $53 million after losing $16 million in the first quarter.

The company also said shipments during the quarter rose 17 percent from a year before, outstripping the industry's gain overall.

"Our expenses-to-revenue ratio improved notably, reaching the best level since the acquisition of IBM's PC division. These achievements bear witness to the clear strategies we set at the beginning of the year and our effective execution of those strategies," said Yang Yuanqing, Lenovo CEO. Lenovo bought IBM's RTP-based PC division in 2005.

Sales in China accounted for 49 percent of Lenovo's business during the quarter, the company said. Emerging markets took 15 percent of sales, while mature markets accounted for 36 percent, it reported.

Sixty-three percent of sales were notebook computers. Consolidated sales of Lenovo desktop computers worldwide decreased 13 percent year-over-year and made up 35 percent of Lenovo’s total sales revenue.

"Lenovo’s second quarter results showed that the company has the right strategy in place and is executing on that strategy," Lenovo Chairman Liu Chuanzhi said. "Our results are moving in the right direction and we are particularly pleased with our performance in China and in the transactional business model."

"We are starting to see positive signs that the worldwide economy is improving," Liu continued, "and we will continue to focus on our long-term goal of growing our business profitably worldwide. The strategy we have set in motion will continue to help us produce the appropriate results, as long as we keep executing as we are capable, and carefully managing our costs."

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