Beijing-based tech firm Lenovo Group Ltd managed to report better-than-expected profits for its second-quarter ending in June. The manufacturing heavyweight reported profits more than double that of previous figures, bolstered mainly by its record high PC market share and its strong internet data center business.
Lenovo reported profits of $162 million, significantly higher than initial analysts' estimates of $154 million. For the eighth straight year, the company also saw its revenues grow. Lenovo's second-quarter revenue was pegged at $12.51 billion. Overall the company's gross profit margins had increased by 16.4 percent for the quarter.
During the company's latest earnings call, Lenovo Chairman Yang Yuanqing explained that the stellar growth in the firm's bottom line was attributed to its growing PC market share. According to the executive, the company's PC market share now stands at a record 24.9 percent in its latest quarter.
The company's earnings were bolstered mainly by the increased sales of both its high-end PC gaming components and its light-weight commercial models. Lenovo also saw an increase in market share in Japan, thanks to its recent 51 percent stake acquisition in rival Fujitsu Ltd's personal computer business.
Lenovo's stellar performance was in line with the global PC market's rebound from April to June. However, its year-on-year growth of 4.4 percent came as a pleasant surprise given the current supply shortages and the negative economic effects of the ongoing trade dispute between China and the United States.
According to researchers, the trade tensions may have actually increased demand for the company's products. With the scarcity of supplies from US firms such as Intel exacerbated by looming tariffs, demand for Lenovo's equipment has marginally increased.
Lenovo's overall PC shipment had grown by 18.2 percent year-on-year, with the company shipping an estimated 16.25 million units. Lenovo's growth in shipments far outperformed its closed rival HP, which only managed to see a 3.2 percent growth.
Lenovo did see a decreased in its mobile business group, which fell by 9 percent for the quarter. However, the company had experienced a 30 percent increase in its smartphone shipments to the United States. Lenovo mentioned that it will be focusing on other emerging markets for its smartphone business in the coming quarters.
Lenovo had warned shareholders that it might be forced to increase product prices if the US does decide to impose tariffs on Chinese imports. However, the company also reassured that they do still have a globally balanced revenue mix across more than 180 markets.
