Lenovo, which is in the process of acquiring Google's (NASDAQ: GOOG) Motorola smartphone business for $2.91 billion, reported its first-quarter profit popped 25 percent on the strength of its smartphone and PC business. The company also said it hopes to sell 100 million smartphones and tablets over the course of this year.
Lenovo's growth in smartphones and tablets will likely come on the back of its international expansion plans; the company said it expects to triple the number of countries where it sells phones by expanding into markets in the Middle East, Africa and Latin America.
Further, Lenovo CEO Yang Yuanqing told Bloomberg the company could improve its margins further if it is successful with its purchase of Motorola as well as its pending purchase of IBM's low-end server unit for $2.3 billion.
Lenovo notched $158.3 million in net income in the first quarter, up from $126.9 million a year earlier. According to Bloomberg, that was largely in line with analyst expectations. Lenovo's revenue during the period grew 19 percent to $9.36 billion from $7.83 billion. Analysts noted the company managed to grow its share of the stagnant PC market and also increased its smartphone sales--notable at a time when other Chinese smartphone vendors are working to expand their own sales.
According to figures reported last month by Strategy Analytics, Lenovo was the world's fourth-largest smartphone vendor behind Samsung, Apple and Huawei. Strategy Analytics said that Lenovo grew its share of the smartphone market from 3.9 percent in the first quarter of 2013 to 4.7 percent in the first quarter of this year on shipments of 13.3 million smartphones in the period.
"If the recent Lenovo takeover of Motorola gets approved by various governments in the coming months, this will eventually create an even larger competitive force that Samsung and Apple must contend with in the second half of this year," Strategy Analytics wrote. Indeed, Lenovo will likely move from being the world's No. 4 smartphone maker to No. 3 when its Motorola deal closes.
In the first quarter, Google counted Motorola as "discontinued operations," separated from its main financials, and said that its net loss from discontinued operations in the first quarter was $198 million, compared to a net loss of $182 million in the year-ago period. Google said that, had it presented Motorola as an operating segment, the segment revenue for the first quarter would have been $1.45 billion.
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