Lenovo Profit falls on Motorola Acquisition

Lenovo Group Ltd. on Tuesday said its fiscal third-quarter net profit fell 4.5% from a year earlier, reflecting the close of its purchase of unprofitable phone maker Motorola Mobility.

The world’s largest maker of personal computers by shipments said its net profit for the three months ended Dec. 31 fell to $253 million from $265 million a year earlier, beating analyst estimates, while revenue rose 31% to $14.1 billion.

Lenovo in October closed its $2.91 billion acquisition of Motorola Mobility from Google Inc. and $2.1 billion purchase of International Business Machines Corp.’s low-end server business.

“The two newly acquired businesses are achieving great momentum in their first quarter of integration,” said Lenovo Chief Executive Yang Yuanqing in a statement. “They are definitely becoming our growth engines.”

Motorola sold more than 10 million units for the first time in the quarter, the company said.

Founded in China, Lenovo acquired IBM’s PC business in 2005. The company, now based in both the U.S. and China, surpassed Hewlett-Packard Co. to become the No. 1 PC maker by shipments last year.

As the global PC market has become saturated, Lenovo has searched for new avenues of growth including smartphones and servers.

Source: MarketWatch