Lenovo Group Ltd., the world's No. 4 PC maker, said Thursday its quarterly profit rose 65 percent as strong sales in China and emerging economies offset weakness in the United States.
Profit for the three months ending June 30 was $110 million, or $1.25 per share, the company said. Sales rose 10 percent to $4.2 billion.
"Despite a softening global economy, we delivered solid gains in worldwide sales, PC shipments and profits," Chairman Yang Yuanqing said in a prepared statement.
Yang expressed confidence that the Beijing Olympics, which open Friday, will help the company's efforts to establish a global brand. Lenovo is the only Chinese company among 12 worldwide partners of the International Olympic Committee and is supplying computer equipment and technicians to the games.
"The global spotlight is shining on Lenovo, our products and our people," CEO William J. Amelio said in a conference call with reporters.
Sales in Greater China rose 22 percent to $1.7 billion. China accounted for 41 percent of sales.
The strength of its home market has helped to drive Lenovo's expansion. But it faces competition from industry leader Hewlett-Packard Co. and No. 2 Dell Inc. Both are trying to expand in China, and Dell has launched a low-cost PC aimed at Chinese buyers.
China's economy is slowing slightly but still is expected to expand this year by at least 9 percent. Retail sales showed their strongest monthly growth on record in June, rising by 23 percent from the same period of 2007.
Lenovo's sales in the United States and the rest of the Americas fell 4.8 percent to $1.1 billion.
Lenovo has said it expects to avoid a serious hit from the U.S. slowdown because it depends on the American market for only a small percentage of its sales.
Still, weakening U.S. demand and increased competition squeezed Lenovo's gross profit margins to 14.1 percent, compared with 14.8 percent in the year-earlier period.
"We're all hopeful that the market is going to continue to improve," Amelio said. Meanwhile, he said, "we're working diligently on taking down costs and cutting expenses."
Lenovo underwent a sweeping restructuring after acquiring IBM Corp.'s personal-computer unit in 2005. The company says it has steadily improved efficiency and profit margins as it shifts focus to direct retail sales and emerging markets.
Lenovo entered the competition for ultra-small PCs this week with the release of its first "netbook." Aimed at students and first-time buyers, it offers the ability surf the Web, send e-mail and run simple applications.
Amelio offered no sales forecast for the unit but said, "we think that's going to be a pretty effective seller."
