Lenovo Group Ltd, on track to become the world's top PC maker, clocked its weakest quarterly profit growth in more than two years as customers increasingly switched to mobile gadgets from PCs for their computing needs.
The Thinkpad maker has had a strong run in the PC era, successfully grabbing market share from rivals such as Dell Inc and Acer Inc. Technology research firm Gartner says it has already overtaken market leader Hewlett Packard Co in PC shipments and rival research firm IDC ranks it a close second.
But Lenovo now faces challenges in mobile computing business, where it has forayed recently and has to compete with dominant smartphone and tablet PC makers such as Samsung Electronics Co Ltd and Apple Inc.
Lenovo reported a net profit of $162 million in the July-September period, compared with $143.9 million a year earlier and a $156.3 million consensus forecast from nine analysts on Thomson Reuters I/B/E/S.
Lenovo has traditionally been adept in capturing market share in the PC sector, claiming the No.1 spot in markets such as China, India and Japan.
A raft of acquisitions in the United States, Japan, Germany and Brazil over the past few years has also helped strengthen its foothold.
However, with the PC sector seen as a sunset industry, Lenovo will have to pack more punch in its mobile computing products in a sector where consumers are often fickle on brands and features.
Last month, it launched the Yoga, a laptop running Microsoft Corp's Windows 8, which can be converted to a tablet PC by flipping the screen all the way backwards.
Lenovo's smartphones, such as LePhones, have gained traction in China with the PC maker ranking second in terms of market share in the second quarter, behind Samsung, IDC data showed.
Whether its Windows tablets and smartphones achieve wider success remains to be seen, in a market where Google Inc's Android and Apple's iOS rule.
Shares of Lenovo, which derives nearly half of its sales from homeground China, were down 2.2 percent by the midday break on Thursday, ahead of the results and in line with the broader market's fall.
Lenovo shares are up 28 percent since the start of this year, beating the performance of other PC makers, such as HP, Dell and Acer.
(Reporting by Lee Chyen Yee; Editing by Muralikumar Anantharaman)