Lenovo reported stronger-than-expected quarterly earnings and said that its Motorola Mobility unit is performing well. The company said it could grow its smartphone business to 30 percent of its total revenues.
The PC, smartphone and tablet giant became the world's No. 3 smartphone maker after Samsung Electronics and Apple (NASDAQ: AAPL) following the close of its $2.9 billion acquisition of Motorola in October. Lenovo said Motorola sold more than 10 million units in a quarter for the first time in its most recent quarter. Lenovo is bringing the Motorola smartphone brand back to China, the world's largest smartphone market.
Overall, Lenovo said its fiscal third-quarter net profit slipped 5 percent year-over-year to $253 million. However, that beat analysts' estimates for a net profit of $184.6 million, according to the Wall Street Journal. Lenovo said its total revenue in the quarter jumped 31 percent to $14.1 billion.
Lenovo CEO Yang Yuanqing told the Journal he expects Lenovo's smartphones to bring in 30 percent of the company's revenue in a year, up from 24 percent in the most recent quarter.
According to research firms IDC and Strategy Analytics, Lenovo plus Motorola had a combined 24.7 million smartphone sales in the fourth quarter, good for around a 6.6 percent global market share. Although the company has a long way to go to catch up to Samsung and Apple (both of which had around 75 million smartphone sales in the fourth quarter), Yang has said that the company's near-term goal is to sell 100 million smartphones by the end of the fiscal year, or March 2015.
Yang said the Motorola deal will set Lenovo apart from Chinese competitors Xiaomi, Huawei and ZTE. "We're not the same as the other Chinese players because now we have become a global player," Yang told Reuters.
Although Xiaomi has not expanded much beyond Asia, both Huawei and ZTE are global brands and have sold smartphones in the U.S. market for years, though their brands are certainly not as iconic in the U.S. as Motorola.
Yang vowed to fight back against Xiaomi in China by emulating Xiaomi's Internet distribution model, according to Reuters. Lenovo in May inked a deal with e-commerce site JD.com and announced a subsidiary last month to sell smartphones and wearables exclusively online. When Motorola soon re-enters the Chinese market its phones will be distributed primarily online, Yang said.
- see this Lenovo release
- see this Lenovo presentation (PDF)
- see these two separate WSJ articles (sub. req.)
- see this Bloomberg article
- see this Reuters article
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