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Business

PC leader Lenovo's profit hit by smartphone boom

Lenovo has seen its profit slump by two thirds amid the ongoing global trend to use smartphones instead of PC's. The computer giant is struggling to diversify its products but said it faced "sizeable challenges."

Beijing-based Lenovo announced on Thursday that its net profit had fallen by 67 percent year-on-year in the third quarter, when it had earned a meager $98 million.

Revenues were also down six percent in Lenovo's third fiscal quarter, ending December 2016.

"Lenovo faced sizeable challenges in its three main lines of business, namely data centre, mobile devices, and PCs and smart devices," the firm said in a statement

Lenovo remains the world's largest PC maker, but has been trying to broaden its smartphone business as the market for personal computers fizzles. Yet, it's struggling to keep pace with Apple and Android rivals. Sales of the firm's Moto and Lenovo branded phones slipped 23 percent year-on-year in the three months to December.

Moreover, its data centre business, which includes servers, storage, software and services took a 20 percent dive in sales compared with the previous year. Rising component prices had also been weighing on profits, the company said.

On a brighter note, Lenovo's PC and smart device business, which includes tablets, still saw sales gains of two percent, spurred by "strong growth in North America."

US firms HP and Dell follow Lenovo as leaders in the global PC market. All three increased their share of the market in the final quarter of last year, according to industry trackers. Lenovo announced in January that it was in talks over a potential merger with Japan's struggling PC maker Fujitsu.

uhe/jd (AFP, dpa)