LENOVO Group Ltd will sell its mobile-phone unit - the No. 1 China-brand handset maker in the domestic market - for a cool US$100 million.
While the cell-phone arm announced a less-than-expected third-quarter performance yesterday, the company's overall result showed that profit trebled.
The world's fourth-biggest personal computer maker made the sale announcement the same day.
Lenovo's major PC business continued to grow and helped with the triple treat for the fiscal third quarter ended on December 31.
Lenovo will sell the mobile-phone unit to a finance group made up of Hony Capital, Ample Growth and Super Pioneer. Hony Capital, which leads the group, is a brother company of Lenovo Group and both are subsidiaries of Lenovo Holdings.
Beijing-based Lenovo said it will focus on PC and related businesses and exports.
"It is a natural thing after its mobile-phone business dropped since the middle of last year," said Sandy Shen, a telecommunications analyst at Gartner Inc, the noted United States-based IT consulting firm.
In the quarter, Lenovo's mobile-phone revenue was US$108 million, a drop of 31 percent quarter on quarter, according to the Hong Kong-listed company.
Lenovo's mobile-phone market share, ranking No. 4 in the domestic market, was 3.6 percent in the third quarter, a one-percentage point drop from the previous quarter.
Nokia, Samsung and Motorola are the top three, according to Gartner.
Lenovo Mobile has had problems on handset design and channel management but the spin-off will have positive results for the Lenovo big picture and bottom line, Shen said.
Driven by strong sales and aggressive cost-cutting, Lenovo's profit in the quarter was US$172 million, or US$1.93 per share. Lenovo's revenue was US$4.6 billion and China market still accounted for the biggest part - 40 percent.
In America, revenue was US$1.2 billion, or a quarter of the total.
Lenovo's share price hit HK$5.37 (69 US cents), up 12.58 percent, while the benchmark Hang Seng Index lost 0.84 percent.
Lenevo sees "double-digit" revenue growth this year ahead of a possible US recession.