UPDATE 1-One-offs help Lenovo return to black

* Q3 net profit $79.52 mln vs market forecast of $43.38 mln

* Revenue up to $4.78 bln, helped by China sales

* Op margin thin at 2.06 pct, pointing to more competition

* Shares up 10 pct so far this year, beating big board
(Adds results details)

By Kelvin Soh

HONG KONG, Feb 4 (BestGrowthStock) – Lenovo (0992.HK: ), the world’s
No. 4 PC brand, returned to the black in its fiscal third
quarter, beating expectations and recording its best result in
six quarters, helped by one-off gains and strong Chinese demand.

It also marked a turnaround for one of China’s best-known
brands, which this time last year posted its first loss in three
years and saw its chief executive resign and the return of Yang
Yuanqing as CEO.

Since then, the company has tried to return to its roots as
an emerging markets specialist, after it struggled to integrate
Western-focused assets it acquired with its purchase of IBM’s
(IBM.N: ) PC business in 2005.

“The worldwide PC market outlook has continued to show
improvement under increased signs of economic recovery, and
consumer demand has remained resilient,” Lenovo said in a filing
to the Hong Kong stock exchange.

The company reported a net profit of $79.52 million for the
last three months of 2009, in a filing to the Hong Kong stock

The result far exceeded expectations for a $43.38 million net
profit, according to the average of five analysts surveyed by
Reuters, and compared with a net loss of $96.7 million recorded a
year earlier.

However, about $43.4 million was atributed to one-off gains,
which Lenovo said represented “gains on disposal of
available-for-sale financial assets and dividend income.”

Lenovo’s operating profit margin was 2.06 percent, according
to Reuters calculations from company figures, as competition
continued to intensify from other PC brands such as Acer
(2353.TW: ) and Asustek (2357.TW: ). The previous quarter’s margin
came in at 1.1 percent.

China continued to fuel much of Lenovo’s growth, with
shipments in the world’s third-largest economy up 41 percent to
make up 47 percent of the company’s total revenue in the
October-December quarter.

Like its peers, including HP (HPQ.N: ) and Dell (DELL.O: ), the
company has had to struggle with stiff competition during the
global downturn, which saw technology spending drop sharply among
consumers and businesses.

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UPDATE 1-One-offs help Lenovo return to black