Lenovo pulls back in third quarter

Lenovo's (0992) net profit fell 23 percent yearly to US$337 million (HK$2.63 billion) in the quarter through December, but the drop narrowed from the previous quarter, partly thanks to the strong growth in markets out of China.

Its revenue advanced 3 percent to US$15.72 billion in three months ended December, the first time to record yearly growth in nearly one and a half years.

Its shares gained more than 3 percent after the world's largest PC maker reported a return to growth, reflecting a gradual pickup in demand after a prolonged slump.

Net profit and revenue during nine months ended December recorded 49 percent and 13 percent drops respectively, while the gross profit margin expanded 0.2 percentage points.

The results show demand for personal computers, while coming back slowly, is returning to a more positive trajectory, chief executive Yang Yuanqing said. The business should improve, though a migration away from traditional servers toward higher-end setups for training and developing AI may pressure profitability in the short term, he added.

Lenovo is betting on artificial intelligence to propel hardware sales this year.

Bloomberg and staff reporter