Lenovo Group Ltd. (OTC: LNVGY), the Chinese company that purchased IBM Corp.'s (NYSE: IBM) personal computer hardware division a few years ago, nearly tripled its latest quarterly profit. The higher results were due to cost cuts and increasing market share in the PC market.Lenovo is still not a household name to many U.S. customers, although the brand is well-known in global circles and is the largest PC seller in Asia. The company is the third-largest maker of PCs behind leader Hewlett-Packard Corp. (NYSE: HPQ) and Dell, Inc. (NASDAQ: DELL). The company's net income for the Q3 period rose to $105.3 million from the year-ago $38 million, with a collection of five analysts (not really a consensus, heh) giving an average estimate of $72 million for the quarter. Lenovo blasted through that average estimate handily.
Although Lenovo is increasing its market share and is reducing employee headcount to get costs in control when it comes to labor, it faces a formidable challenge from the strength of HP, which has gained on every front from operational efficiency to labor costs to more sales in the last 24 months.
Dell is also trying to become a resurgent and relevant player after several years of sluggish performance and the loss of the "world's biggest" crown to HP. Acer is also planning to move ahead of Lenovo with its recent acquisition of Gateway, so the race for PC sales is definitely not stopping any time soon. Is the PC dead? Far from it.
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