Earnings per share were $1.99, or $1.96 on a diluted basis.
What's more, the company was able to post a profit for the first time in its smartphone division.
That means it's gaining traction in that business, even though it's not an immediate threat to Apple or Samsung.
The company reported that continues to outgrow the broader market, particularly in Europe, the Middle East and Africa, where it outgrew the market by 36 points. In EMEA, Lenovo has amassed a record 11.1 percent market share.
Lenovo is doing this while strengthening its lead in China, where it currently holds a 36.7 percent share of market. This means that if PCs are indeed dying, nobody took the time to explain this to Lenovo.
That close to 90 percent of the company's business comes from PCs is remarkable, especially in the current climate, where the death of PCs is being screamed everywhere.
The travails of the PC industry are often used as a bear argument against Lenovo. This is understandable.
For instance, even though Lenovo is the brand of choice for one out of every three PCs sold in China, a market with a population of more than 1 billion people, the profit is not as attractive relative to the volume sold. The issue is that PCs are a low-margin business.
But, as I noted, Lenovo understands that it needs to diversify. To that end, mobile devices are becoming an increasingly important part of the company's strategy. And it's beginning to show in the numbers. For instance, in this quarter, mobile devices contributed to 11 percent of overall revenue.
While this is not a breathtaking change, it is still progress. Besides, it's not as if Lenovo is struggling to hold PC market share. Meanwhile, Lenovo is rumored to be weighing a bid for Research In Motion (now BlackBerry), and the company said it would consider RIM among other options, according to Bloomberg.
It's a move that makes too much sense to not happen, and it's something I discussed at TheStreet last year, long before these rumors surfaced. In that article, I wrote the following:
Lenovo deserves more love than it gets from investors. While the company is operating on all cylinders, it is still a relatively unknown. But I think with its tablet and smartphone objectives this is all about to change. It is not out of the realm of possibility that Lenovo might consider making a play for a company such as Research In Motion. I can't think of a better way for it to make a splash on the market while also announcing its presence in the U.S. in the most authoritative way.
If Lenovo's mobile ambitions are to be taken seriously, this is a move it has to make. While the company is taking meaningful small steps, it may have to be reminded of how fruitful was its giant leap to buy International Business Machines' PC business back in 2005. This is the same scenario. Making a play for RIM will yield similar to greater results — especially in its own home country of China where it is competing with both ZTE and Huawei for smartphone share.
That the company has made this much progress in such a short period of time is remarkable. But Lenovo is anything but content. It's taken on prominent names such as HP, Dell, etc. and won. It now has its eyes set on Apple and Samsung in the mobile device and tablet market. That's a pretty tall task. Then again, so was growing a morbid PC business. But Lenovo's management figured out a way to succeed.
Despite the market's pessimism about PCs, the stock looks too cheap at this level to ignore. In the long term this stock can hit $30 as Lenovo gains more mobile device market share. But unless investors remove their existing PC bias, it might be too late.