The Wall Street Journal-20080131-Lenovo Net Rises- Handset Unit Will Be Sold

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Lenovo Net Rises; Handset Unit Will Be Sold

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HONG KONG -- Lenovo Group Ltd. said its fiscal third-quarter net profit nearly tripled and that it entered a preliminary agreement to sell its mobile-handset business to focus on its core personal- computer business.

China's largest PC maker by revenue said it will sell its interest in its mobile-handset business to a private-equity group led by Hony Capital for $100 million. Hony Capital is the private-equity arm of Legend Holdings.

In the quarter ended Dec. 31, shipments of Lenovo's mobile handsets, which are primarily sold in China, fell 31%. Handset shipments generated sales of $108 million, just 2% of total sales. Still, strong PC shipments propelled Lenovo's net profit to $171.7 million from $57.7 million a year earlier. Revenue rose 15% to $4.6 billion from $4 billion.

Lenovo's world-wide PC shipments exceeded the average growth rate of the global PC market, with year-over-year growth of 22%, outpacing the industry's average growth of 16%.

Lenovo plans to offer servers to small and medium enterprises through a deal with International Business Machines Corp.