Cost cuts push Lenovo profit up 198 pct.

BEIJING - Lenovo Group, the world's No. 4 personal computer maker, said Thursday that profit in its third fiscal quarter rose 198 percent and forecast strong sales this year despite a possible U.S. economic slowdown.

Driven by strong sales and aggressive cost-cutting, profit for the three months that ended Dec. 31 was $172 million, or $1.93 per share, on revenue of $4.6 billion, Beijing-based Lenovo said. That was below the average $253.5 million expected by analysts polled by Dow Jones Newswires.

In 2008, Lenovo expects double-digit sales growth despite a possible U.S. slowdown, due to its bigger presence in faster-growing markets such as China and India, Chief Executive William J. Amelio said.

"We have such a good base in other geographies, we have a great way to insulate ourselves from some of the downturn that may occur in the United States," Amelio said in a conference call with analysts.

Also this year, Lenovo will stop using the IBM name as it tries to establish itself as a global brand, Amelio said. Lenovo has had rights to the name since acquiring IBM Corp.'s PC unit in 2006 but has been selling a growing number of products under its own brand.

Lenovo's home China market was its biggest revenue source for the quarter, but sales in the U.S., Europe and elsewhere in Asia also grew.

Sales in China rose 16 percent to $1.8 billion, or 40 percent of the total, the company said.

Lenovo is facing growing competition in its home market from industry leader Dell Inc., which is marketing a low-cost PC designed specifically for China's huge but poor rural market.

Revenue in the United States and the rest of the Americas rose 15 percent to $1.2 billion, the company said. Sales to Europe, Africa and the Middle East rose 24 percent to $1.1 billion.

Notebooks were the strongest part of Lenovo's portfolio, with quarterly sales up 38 percent to $2.6 billion, or 56 percent of total sales, the company said.

Lenovo achieved "aggressive cost savings," slashing production expenses per unit by 13 percent in the third quarter as part of a long-term effort to streamline production, Amelio said.

The IBM PC unit was a premium, high-cost manufacturer, but Lenovo has been pushing to bring expenses in line with more efficient rivals such as Dell. Lenovo has moved U.S.-based engineering jobs to China and made other cuts.