Lenovo Group said Tuesday its quarterly profit declined 5 percent, reflecting the computer maker’s acquisition of the unprofitable Motorola mobile phone business.
The company said it earned $253 million, or $2.30 per share, in the three months through December. Revenue rose 31 percent to $14.1 billion.
The profit decline reflected the integration of Motorola into Lenovo. The acquisition closed in October and Lenovo included two months of Motorola’s operations in its results.
“This quarter, we are at the starting line of a new race, but 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,” said Yuanqing Yang, chairman and CEO of Lenovo.
“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. Motorola is already a global strength: for the first time it sold more than 10 million units in the quarter and it is now re-entering the China market.
“Meanwhile, we have a strong start with the {IBM] System x integration, even while we further refine and develop it, leveraging Lenovo’s operational excellence and efficiency to be even more competitive. I remain fully confident we will meet all of our financial commitments this year, and also that we are on the right track to win in the long term.”
Lenovo said its transformation into a supplier of a mobile devices and enterprise products was proceeding quickly. Mobile devices accounted for 24 percent of revenue, while the share from personal computers declined to 65 percent from 81 percent.
Lenovo, based in Beijing and in Morrisville, also acquired IBM Corp.’s low-end server business in September.
Lenovo says that combined with Motorola it is the world’s third-largest smartphone producer, behind Apple and Samsung. It said Motorola, which re-launched its brand in China in January following a two-year absence, sold 10 million phones during the quarter for the first time.
