Lenovo Group, the world’s biggest personal computer maker, said Thursday its latest quarterly profit rose 23 percent on strong growth in sales of smartphones and other mobile devices.

However, Lenovo is still waiting to secure U.S. government approval of more than $5 billion in acquisitions: It’s purchase of IBM’s x86 server business, which is based in RTP, and Google’s Motorola Mobility smartphone business.

“We are making progress, but we definitely still have some things to do with multiple government agencies,” Yang Yuanqing, Lenovo’s chairman and CEO, told Bloomberg news in an interview. He did not elaborate on the remaining issues.

The company said it earned $214 million, or $2.06 per share, in the three months ended June 30. Global revenue rose 18 percent to $10.4 billion.

Recent Lenovo coverage in WRAL TechWire:

  • Lenovo’s Yang hails a “month of milestones” in growth
  • Lenovo’s smartphone share grows at rapid rate
  • Motorola Mobility sales reportedly rebound

Sales of mobile devices rose 32 percent over a year earlier to $1.6 billion. The company is investing heavily in smartphones, tablet computers and other wireless devices, and has said it expects mobile sales to be the bulk of its future revenue.

Lenovo, based in Beijing and in Morrisville where it operates its executive headquarters, expanded its market presence by acquiring part of IBM’s server business in January for $2.3 billion. A week later, it bought the Motorola Mobility smartphone business from Google for $2.9 billion.

With those acquisitions and the recovery of the PC market, “we see even more opportunity to keep growing rapidly,” said chairman Yang Yuanqing in a statement.

Sales of Lenovo’s traditional desktop PCs rose 20 percent to $3 billion, accounting for 29 percent of total revenue. The company said shipments rose 12.1 percent over a year earlier, compared with an industry average of 2.4 percent.

“We believe Lenovo’s PC business will remain solid given the better global PC outlook. We expect Lenovo to continue to gain market share,” said Kirk Yang and Ric Cheng of Barclays in a report. “Its smartphone shipment momentum is likely to pick up.”
Still, they cautioned that Lenovo’s strength in its home China market, where it has experience and strong distributor relationships, “is not easily replicated” abroad.

Revenue in China rose 2 percent to $3.8 billion, or 36 percent of the total. Revenue in the United States and the rest of the Americas rose 19 percent to $2.2 billion while combined revenue for Europe, the Middle East and Africa rose 27 percent to $2.8 billion.
The company said it rose to No. 3 among global tablet computer suppliers.

“This has been a quarter of milestones for Lenovo – record PC share, a number three ranking in worldwide tablets for the first time, and an even stronger number four global smartphone position,” Yang said. “As the PC industry recovers, the smartphone market continues its shift from premium to mainstream, and our acquisitions of Motorola Mobility and IBM x86 proceed toward completion, we see even more opportunity to keep growing rapidly. Lenovo continues to outperform the market and meet our commitments to improve profitability in our core businesses, while building strong pillars for future growth across our entire portfolio.”