Lenovo has just posted its first quarter earning and the numbers are quite telling. Not only did it beat profit forecasts, it has also given more evidence of a declining PC business as smartphones and tablets become more ubiquitous and user friendly.
Lenovo gained a net profit of $174 million in the quarter, rising by as much as 23% and beating out a $166.0 million forecast made by analysts. Its gross profit margin went up by 0.5 percent from last year’s 13.1 percent. Overall, Lenovo’s quarterly revenue rose to $8.8 billion at a 9.7 percent increase. But that’s only half the story, and the other half is more interesting for us.
Lenovo’s posting shows that the company has gotten higher revenues from the combined sales of its smartphones and tablets than from its PC business. This matches an earlier report from IDC showing how Lenovo almost doubled its smartphone sales in the second quarter of this year, unseating ZTE as the 4th global leader in smartphone sales. This number could go even higher as the company plans to put a stronger emphasis on mobile, especially in the US market where it still has to make a name for itself as a smartphone company.
While things seem to be looking up for Lenovo, the company isn’t ready to declare a victory yet. It considers its mobile business to still be in the development stage despite its profitability in China. There are already industry rumors about Lenovo trying to expand its reach through partnerships or acquisitions, with the floundering Blackberry being the obvious target, but it’s too early to tell if it makes sense for the company in the long run.