Lenovo Group Ltd., the world’s largest maker of personal computers, reported second-quarter profit that beat analysts’ estimates after increasing its share of the global markets for PCs and smartphones.

Net income climbed 36 percent to $219.7 million in the three months ended September, from $162 million a year earlier, Lenovo said in a stateLment today. That surpassed the $202.7 million average of 17 analysts’ estimates compiled by Bloomberg.

Lenovo posted the biggest gain in shipments among the world’s top-five PC vendors during the period as the industry experienced a 7.6 percent drop amid weak consumer sentiment for traditional computers, researcher IDC reported last month. Chief Executive Officer Yang Yuanqing has maintained earnings growth amid the industry slump by expanding in mobile devices to compete with Apple Inc. and Samsung Electronics Co.

“The better profit is due partly to its smartphone business and cost control,” Jenny Lai, a Taipei-based analyst at HSBC Holdings Plc, wrote in an e-mail today. “Top-line growth is coming from both corporate replacement cycle and rising contribution from smartphone sales.”

Lenovo, which has its headquarters in Beijing and Morrisville, rose 2.1 percent to HK$8.60 at the close in Hong Kong trading. The stock has climbed 23 percent this year, surpassing the 1 percent gain in the city’s benchmark Hang Seng Index.

Smartphone Sales

Second-quarter revenue rose 13 percent to $9.77 billion. That compares with the $9.41 billion average of 18 estimates compiled by Bloomberg.

The company’s share of the global PC market expanded to 17.3 percent in the period, from 15.7 percent a year earlier, as it managed to boost shipments 2.2 percent amid the industry’s decline, IDC reported last month.

Smartphone shipments by Lenovo rose 78 percent to 12.3 million units, the company said today.

Lenovo, which released its flagship K900 handset in May, ranked fourth in global smartphone shipments during the period as its market share rose to 4.7 percent, from 3.7 percent a year earlier, according to IDC.

The company, which currently sells handsets in China and nine other nations, is preparing to release the devices to more markets in the Middle East, Africa and Latin America, Yang said on a conference call today. That may boost mobile devices to 50 percent of sales within five years, from 20 percent now, he said.

New Markets

“Our expansion in worldwide markets has gained real momentum,” Yang said. “Over the next couple of quarters, in our second wave, we will expand phones to at least 20 more countries.”

While the company has plans to grow the business organically, it will also look at opportunities to expand through acquisitions, Yang said.
Lenovo hasn’t been told by any government that it couldn’t purchase assets because it’s a Chinese company, Chief Financial Officer Wong Wai Ming said on the call. Wong was responding to a question about a report in The Globe and Mail that Lenovo had pursued a bid for BlackBerry Ltd. until the Canadian Government said it wouldn’t accept a Chinese takeover of the company because of national security concerns.

He declined to comment specifically on any interest the company may have in bidding for BlackBerry.