• Records in pre-tax income of US$246 million and earnings of US$205 million
• Record quarterly sales of US$9.4 billion
• Record 14.1 million PC shipments and record 15.9 percent global market share
• Basic EPS of 1.99 US cents, or 15.42 HK cents
• Net cash reserves of US$4.2 billion (as of December 31, 2012)

HONG KONG — (BUSINESS WIRE) — January 30, 2013 — Lenovo Group today reported results for its third fiscal quarter ended December 31, 2012. In its best quarter ever, Lenovo continued to outgrow the market in all geographies with record sales, pre-tax income and earnings. Lenovo continued its push towards becoming the world’s leading PC maker and emerging global leader in PC Plus devices, with another quarterly sales record of $9.4 billion, an 12 percent year-over-year increase.

For 13 consecutive quarters, Lenovo has been the fastest growing major PC company. Lenovo was also recognized by IDC as the world’s third largest maker of “smart connected devices,” such as tablets, PCs and smartphones. At the same time, Lenovo had another quarter of record pre-tax income at US$246 million, demonstrating that such rapid growth is being achieved while profits increase.

Lenovo’s third quarter earnings were also a record at US$205 million, an increase of 34 percent over the last year, with gross margin at 11.8 percent. Gross profit for the third fiscal quarter increased 15 percent year-over-year, to US$1.1 billion, while operating profit for the third quarter was US$243 million, a 26 percent increase year-over-year. Basic earnings per share for the third fiscal quarter was 1.99 US cents, or 15.42 HK cents. Net cash reserves as of December 31, 2012, totaled US$4.2 billion.

The Company’s ‘Protect and Attack’ strategy – protecting the two profit pools of global commercial PC and the China businesses, while attacking three high growth opportunities in emerging markets, global consumer and PC Plus products, such as smartphones, tablets and smart TVs – continued to deliver results. This quarter, Attack businesses delivered 50 percent of the Company’s revenues, a significant increase from four years ago when the Company first launched the strategy and attack revenues were 32 percent. Further demonstrating the Company’s balance, its Mobile Internet and Digital Home (MIDH) revenues, which includes its smartphone, tablet and smart TV businesses, accounted for a record 11 percent of Company revenue this quarter, up 77 percent year over year. And for the first time, its smartphone business in China became profitable.

During the third fiscal quarter, Lenovo’s worldwide PC shipments grew 7.9 percent to an all time high of 15.9 percent* marketshare, in a difficult market that was down 7.8 percent year-over-year. This was the 15^th quarter in a row the Company grew faster than the industry. Lenovo gained share points in every geography and every product category and in every respective customer segment.

While the Company’s organic growth continues to drive the majority of its success, shareholders should note that Lenovo has closed the joint venture and acquisitions announced in the previous two quarters, including its strategic partnership with EMC that includes a joint venture in EMC’s Iomega business; its acquisition of CCE, a leading PC+company in Brazil, and its acquisition of Stoneware, a US-based cloud computing company. Further, the Company reports that integration of all mergers and acquisitions transactions announced in the last three years are well on-track, and in many cases ahead of schedule.

Lenovo recently realigned its product development and supply chain organizations to create two new groups: the Lenovo Business Group, which will focus on mainstream PCs, mobile internet and digital home products; and the Think Business Group, which will focus on Think-branded products targeting high-end consumers and enterprises. Today, Lenovo is twice as large and much more diverse than it was when its existing structure was established over four years ago. That structure was ideal in supporting Lenovo’s business when it was mostly focused on its China PC and global commercial PC business. Today, the Company has built strong consumer, mobile and emerging markets businesses globally, so the change was proactively initiated to drive continued performance across all of these businesses, stay ahead of consumer demands, while driving speed, agility and innovation.

The recently concluded Consumer Electronics Show (CES) in Las Vegas continued to show that innovation is a significant competitive advantage and future growth driver for Lenovo. The Company was recognized with a record 50 awards at CES, including several “Best in Show” acknowledgments. A robust pipeline of innovative products including the IdeaCentre Horizon - a 27-inch table top PC; ThinkPad Helix - Lenovo’s latest convertible PC designed for business professionals; and the Intel-powered, K900 smartphone are well positioned to continue to stoke new customer demand and drive Lenovo’s performance.

"With the strong execution of our 'Protect and Attack' strategy, Lenovo has not only achieved record revenue, profit and global PC market share last quarter, but also our smartphone and tablet businesses have delivered hyper growth. Even more, our worldwide tablet and China smartphone businesses have become profitable," said Yang Yuanqing, chairman and CEO, Lenovo Group. "As we continue into the PC Plus era, Lenovo has already laid a solid foundation. Our new organization will provide the structure to elevate our diversified business and drive it to the next level. We are confident that we can win through differentiation and will be the innovation leader in the PC Plus era."