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Lenovo Posts Healthy Results as Competition Increases.

Lenovo Group Ltd, the company formerly known as Legend Group Ltd and China's largest PC maker, has posted a robust set of year-end results, amid concerns over tough competition in its core PC business.

For the year ending March 31, Lenovo posted a net profit up 3% at HKD 1.05bn ($134m) from HKD 1.02bn ($131m). Sales rose 14.5% to HKD 23.2bn ($2.97bn) from HKD 20.3bn ($2.6bn) a year ago.

The revenue breakdown of the company's businesses is 51.5% for corporate IT sales, 33.5% for consumer IT sales, 8.8% for handheld devices, 3.8% for contract manufacturing, and 2.4% for IT services.

Sales at the services business rose 198% to HKD 548m ($70.2m), although this is still a fraction of the total business. Revenue in its core PC business to both corporates and consumers increased 11.7%, with Lenovo accounting for 27% of the Chinese PC market in 2003. This was down from 29% a year earlier, and executives said they need to strengthen Lenovo's core business before trying to compete overseas.

Although Lenovo reported a 15.1% rise in its PC unit shipments during the year, the unit volume of China's PC market overall grew 18.3%, according to research firm International Data Corp.

Lenovo is coming under increasing competition from rival PC manufacturers such as Dell Inc and local rival Founder. In February, it restructured its sales divisions and began direct sales to large companies and institutions, a practice normally associated with Dell. Dell meanwhile has been boosting sales to government and corporate customers in China, helping it steal market share away from Lenovo.

Hong Kong-based Lenovo also reported a 42.4% rise in mobile handset sales to HKD 2.050bn ($263m), helped by a 9.3% increase in unit mobile handsets shipments in 2003. Executives said they expect the mobile phone business to turn profitable this year.
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Title Annotation:formerly Legend Group Ltd.
Publication:Computergram International
Article Type:Brief Article
Geographic Code:9CHIN
Date:Jun 3, 2004
Words:321
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