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Lenovo Raises Mobile Share As Motorola Sales Soar

Hong Kong – Motorola’s smartphone shipments jumped 188 percent to more than 10 million in Lenovo’s fiscal third-quarter ending December, boosting Motorola sales to $1.9 billion, Lenovo reported.

For the first time, Motorola sold more than 10 million units in the quarter, Lenovo said.

Lenovo’s mobile business group, of which Motorola is a part, reported $89 million in pre-tax losses on a 109 percent sales gain to $3.39 billion. The loss is up from a year-ago $2 million loss. Lenovo’s mobile group includes Lenovo-brand smartphones not available in the U.S., Android tablets, and TVs.

With the Motorola brand soon reentering the China market, the brand “is on track to be profitable within four to six quarters” of its recent purchase by Lenovo, Lenovo said.

Total smartphone shipments, including Lenovo-brand phones, grew 78 percent to 24.7 million because of the Motorola gains and “aggressive business expansion in emerging markets outside of China from Lenovo-brand products,” the company said.

Lenovo became the third largest vendor of smartphones behind Samsung and Apple with almost 6.6 percent market share, up 78 percent year-on-year. Global tablet market share was 4.8 percent, with 3.7 million shipments, up 9 percent year-over-year.

Lenovo drives about 60 percent of its mobile phone volumes outside China, having entered 67 countries in the last two years, the company said. “Lenovo has built the scale, distribution, brand assets and IP portfolio required to compete around the world and challenge the top two players,” the company contended. “And as smartphone trends move from premium to mainstream, and mature to emerging markets, Lenovo is in the best position to capture these next waves of growth and deliver its stated profitability commitments in the Motorola business.”

In its PC group, which includes PCs and Windows tablets, Lenovo sales hit $9.2 billion with a record high pre-tax income of $494 million, the company reported. Lenovo shipped 16 million PCs in the quarter, up 4.9 percent year-over-year, for a total market share of 20 percent.

On a consolidated basis, Lenovo’s revenues grew 31 percent to $14.1 billion, but third-quarter net income fell 5 percent to $253 million, but net income before merger-and-acquisition accounting charges rose 23 percent to $327 million. The charges included intangible asset amortization and interest on promissory notes related to the acquisitions of Motorola and System x (IBM’s server hardware business).

Consolidated operating profit for the quarter decreased 3 percent year-over-year to $325 million.

PCs accounted for 65 percent of the company’s revenue, down from a year-ago 81 percent, as the company pursues the mobile market more aggressively. Mobile delivers 24 percent and enterprise contributes 9 percent, the company said.