Lenovo, Even Without Motorola, Grew Smartphones 47 Percent in Q3

Lenovo’s third-quarter included record revenue and profit, sales of 2 million smartphones in China and new plans for attack. 

Lenovo continues to protect and attack and succeed. On Feb. 13 it announced the results of its fiscal 2013/2014 third quarter, which included record revenue and profit. Lenovo’s revenue was $10.8 billion U.S.—marking the first time it surpassed the $10 billion mark—and net profit was $265 million, up 30 percent year on year.

“We are focused on protecting our core PC business while aggressively attacking gross PC+ areas, including tablets, smartphones, servers and storage,” CEO Yang Yuanqing said during the earnings call.

In the PC space, Lenovo not only protected its leading position, said Yang, but grew profits 27 percent year on year and enjoyed balanced growth worldwide. Lenovo’s tablet sales, over the same period, grew 325 percent, nearing 3.4 million units.

In the smartphone space, Lenovo said sales grew nearly 50 percent year over year and included a record 2 million-plus units to China.

In January, Lenovo made two major deals within days of each other, buying IBM’s low-end x86 server business for $2.3 billion and then acquiring Motorola Mobility from Google for $2.9 billion.

“Our plan is clear, and we are now building the foundation of growth for the next decade, said Yang.

The server deal, he continued, will enable Lenovo to enter the market as the number-three player; moving forward, Lenovo plans to bring down costs and make its server business even more profitable than its PC business.

In the smartphone market, Lenovo plans to defend its market share and keep attacking others’.

“We already are mapping out a thorough integration and turnaround plan,” said Yang. “We will realize synergies that are tangible and substantial, as well as introduce new products to the market. We not only can achieve significant savings through lower material costs but can also reduce each one with global scale.”

Lenovo plans to reintroduce new Razr products and new innovations in North America and Latin America, Yang said, as well as in “China and other emerging markets, where we believe customers will embrace Motorola once again.”

Research firm IDC, announcing fourth-quarter 2014 smartphone shipment results Feb. 13, agreed that the Motorola acquisition creates opportunities for Lenovo.

“The acquisition will … provide Lenovo with patent protection and allow it to expand rapidly across the global market,” Anshul Gupta, a Gartner principal analyst, said in a statement. “We believe this deal is not just about entering into the U.S. but more about stepping out of China.”

Lenovo was the number-four smartphone vendor worldwide during 2013, selling 12.9 million units, though the number-five vendor for the whole of 2013, behind Samsung, Apple, Huawei and LG Electronics, respectively.

In January, Lenovo also announced a restructuring of its business into four distinct groups—PC, mobile, enterprise and ecosystem-and-cloud. These will go into effect in April and “drive even more efficiencies, growth and innovations,” said Yang.

“Looking ahead,” he continued, “we are confident that our existing businesses will grow… and we are confident that our new businesses will give us new pillars on which to build long-term sustainable growth.”

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