Lenovo has another strong quarter, but loses ground to Acer

Lenovo turned in another big jump in revenue and net income during its fiscal second quarter, boosted by strong demand for PCs in China and other markets. But a strong performance during the period wasn't enough to stay ahead of Acer.

Lenovo reported revenue of $4.4 billion for the period, up 19 percent from $3.7 billion last year. Net income was also higher at $105.3 million, a gain of 178 percent compared to net income of $37.9 million one year ago.

The company's second-quarter results cap a strong first half for its fiscal year.

Lenovo is in a battle with rival Acer to hold on to its third place spot amidst the ranking of the world's largest PC vendors. While Taiwan-based Acer has come on strong in recent quarters, Lenovo isn't giving up without a fight.

During the first six months of its fiscal year, Lenovo's PC shipments rose 23 percent, outpacing the industry average of 15 percent, the company said. Much of that growth came from China, Lenovo's home market, where unit shipments rose 30 percent between March and September. The company also saw important gains in the Americas and Europe, with shipments rising by 14 percent and 19 percent, respectively.

Even so, Lenovo's growth can't keep pace with Acer, which saw shipments rise 58 percent during the most recent quarter, according to Gartner. Overall, Acer accounted for 8.1 percent of the worldwide PC market during the period, while Lenovo had an 8 percent share of the market, it said. Those figures exclude Gateway, which Acer recently acquired.

Looking ahead, Lenovo plans to start selling consumer PCs outside China during early 2008. Currently, the PCs sold by Lenovo outside China are mainly aimed at business users.

The company dominates the Chinese consumer PC market, and wants to expand this business into new markets outside China. At the same time, Lenovo plans to expand its range of products that command higher margins, such as servers and workstations, it said.