Lenovo annual profit up 1 percent, misses forecasts, on IBM, Motorola deals

Lenovo, the world’s biggest PC maker by sales, said on Thursday its annual net profit rose one percent to $829 million, slightly below analyst expectations, as it completed two major acquisitions during that year. The Beijing-based firm closed in October its $2.1 billion acquisition of IBM’s low-end server unit and also its $2.9 billion purchase of Motorola, and these purchases weighed on its profit for the year that ended March 31. Analysts had forecast a net profit of $857 million. Revenue during the 2014/15 financial year rose 20 percent to $46.3 billion as Lenovo expanded its share of the shrinking PC market to one-fifth. In the fourth-quarter alone, revenue rose 21 percent to $11.3 billion. Lenovo said PC sales rose across all geographic regions but targeted Europe in particular as an area of potential growth. PC sales to businesses rose 3 percent year-on-year despite a 3 percent drop in the broader market, it added. Lenovo has been expanding into enterprise computing and smartphones to offset the decline in PC sales globally. The company said both the IBM unit and Motorola were “on track to deliver their targets”, without giving details. Chief executive Yang Yuanqing has previously pledged to return the business units to profit by mid-2016. After beating earnings expectations in consecutive quarters, Lenovo shares have risen nearly 50 percent to HK $13.6 in the past 12 months, outpacing the 23 percent gain in the broader market.