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Lenovo to Focus on Laptops, Cell Phones

Lenovo Group Ltd., the world's third-largest personal computer maker, will tap worldwide demand for laptops and mobile phones to drive sales and keep cutting costs to boost profit.

"We're not as efficient as we need to be yet," chief executive officer Stephen Ward told investors Wednesday at a Citigroup Inc. technology conference in New York. “Our expense-to-revenue ratio is too high.”

China's Lenovo, which bought International Business Machine Corp.'s money-losing PC business in May for US$1.25 billion, said last month that first-quarter profit rose unexpectedly after trimming costs and winning market share in China. The company changed how it purchases services from IBM to lower expenses and will push faster-selling notebook PCs and cell phones to stimulate sales, Ward said.

To boost market share in China, Beijing-based Lenovo plans to open 800 new franchise stores by year-end, bringing the total to 5,500, Ward said. Lenovo has also opened 70 stores in India as part of a plan to capture demand in high-growth countries, said Ward, who worked for New York-based IBM for 26 years before being tapped to run the combined company.

Shares of Hong Kong-Lenovo have gained 41 percent this year. Lenovo's net income rose 6 percent to HK$357 million (US$46 million), or 4.12 Hong Kong cents a share, in the three months ended June 30, after the company said the IBM business was profitable and helped sales more than triple.

(Shenzhen Daily September 8, 2005)

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