Lenovo Group’s quarterly profit rose 28 percent on strong sales of smartphones and tablet computers but warned this year’s market will be tough.

Lenovo’s PC shipments rose 8.2 percent in the period, the only increase among the world’s four biggest suppliers, as it boosted North America retail sales amid slowing global demand, according to Gartner Inc.

Lenovo Chief Executive Officer Yang Yuanqing is also stepping up development of smartphones, tablets and Internet-ready televisions to challenge Apple Inc. and Samsung Electronics Co.

“Lenovo has the tools to build a profitable smartphone business long-term in China and the Asia-Pacific,” Thompson Wu, a Taipei-based analyst at Credit Suisse Group AG, wrote in a Jan. 28 report. The company also has “a sound strategy to do so,” said Wu, who rates the shares outperform.

Shares in Lenovo fell 2.7 percent in Hong Kong trading, before the announcement. But overall shares has climbed 18 percent this month, surpassing the 5.1 percent gain for the city’s Hang Seng Index.

The company, vying with Hewlett-Packard Co. to become the world’s biggest PC maker, said it earned $205 million in the three months ending in December. Global revenue rose 12 percent to a record $9.4 billion.

The results reflected a rapid shift in global consumer tastes toward mobile services. That is forcing traditional technology leaders to scramble to roll out new products and diversify into services as well as hardware.

Mobile Unit Sales Jump

Sales by Lenovo’s mobile and digital home unit soared 77 percent to $998 million, though that was only 11 percent of total revenue.

The company said its smartphone business in China was profitable for the first time since launch in 2010 and handsets were launched in India, Indonesia, Russia and other markets.

In China, the company ranked second in smartphone sales in the third quarter, according to market researcher IDC.

The PC-maker is assessing potential acquisition targets and strategic alliances to boost its mobile business, including a deal with BlackBerry-maker Research In Motion Ltd., Chief Financial Officer Wong Wai Ming said in a Bloomberg News interview on Jan. 24.

“We are looking at all opportunities — RIM and many others,” he said.

Lenovo later played down such a possibility.

The company previously used acquisitions to boost sales, including buying IBM’s PC division, which was largely based in Raleigh, in 2005. This month, it completed the $147 million purchase of CCE, a Brazilian maker of computers, mobile phones and tablets.

“Lenovo has not only achieved record revenue, profit and global PC market share last quarter, but also our smartphone and tablet businesses have delivered hyper growth,” Yang said in a statement. “We are confident that we can win through differentiation and will be the innovation leader in the PC Plus era.”

Revenues in the bigger but slower-growing PC market rose 7 percent to $7.9 billion.

However, warned PC demand “remains challenging” due to weakening global economic conditions but said it plans to expand its cloud, services and other businesses.

In its home China market, PC shipments rose 2 percent, down from the previous quarter’s 8 percent. Lenovo said that outpaced an industry-wide decline of 2 percent in China, raising its market share by 1.4 percentage points to a record 36.7 percent.

Shipments in the United States and the rest of North America rose 11 percent over a year earlier.

Lenovo released a new version of its ThinkPad notebook computer, the X1 Carbon, in August that it said was lighter and quicker to mimic the convenience of a tablet. Lenovo acquired the ThinkPad brand with IBM Corp.’s personal computer unit in 2005.

Lenovo operates its executive headquarters in Morrisville. 

[LENOVO ARCHIVE: Check out eight years of Lenovo stories as reported in WRAL Tech Wire.]