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Lenovo eyes smartphone domination with Motorola

Chinese electronics giant Lenovo is preparing an "aggressive" smartphone push into emerging countries as it looks to extend its global influence after dominating its domestic market.

The electronic consumer goods company reported bumper earnings on Thursday, with net profits rising 23 percent in the fiscal first quarter year-on-year to $214 million. Lenovo's mobile devices business, saw a 32 percent rise in revenues and, more importantly, nearly 20 percent of sales came from outside of China, up from 5 percent a year ago, as the firm looks beyond its home market.

Lenovo is looking to move away from the traditional PC-based model, which is in fast decline, to mobile devices. To push the strategy, the Chinese hardware company struck a deal to buy IBM's server business and Motorola from Google earlier this year, in agreements worth over $5 billion.

'Race to the bottom'

While Lenovo is the number one smartphone vendor in China, according to IDC, it is fourth globally, but the company said it is betting on "aggressive" expansion in emerging markets to help it grow market share across the world.

Read MoreLenovo: China no longer our most lucrative market

China is the world's biggest smartphone market with local players like Xiaomi and Huawei challenging Lenovo and Samsung with cut-throat pricing.

Analysts said Lenovo's expansion strategy would rely on low-cost smartphones and competitive pricing.

"I expect them to be aggressive on prices as there is a race to a bottom for smartphones in China and that is being replicated abroad," Neil Mawston, mobile analyst at Strategy Analytics, told CNBC in a phone interview.

Motorola challenge

Lenovo has not closed the deal with Motorola yet but, Alex Ng, equity research for China technology at China Merchants Securities, said he expects a conclusion "by the end of this year". The Chinese firm said it expects to return the troubled smartphone brand to profitability in four to six quarters after the deal is finalized.

ChinaFotoPress | ChinaFotoPress | Getty Images

But Ng warned that it would face challenges.

Read More'China's Apple' knocks Samsung off top spot in China

"For this deal it may take a while for the two firms to integrate in terms of culture and manufacturing process. But so far for the data that we see, we are very confident for Lenovo to turn around Motorola earlier than expected," NG told CNBC in a TV interview.

Moto 'mojo'

Motorola launched the Moto E in May, an $150 smartphone tap the rapidly expanding budget smartphone market, which is expected to grow 23.5 percent between 2014 and 2015, according to IHS.

Analysts said that Lenovo would target the low-end market with its own brand phones, while using the Motorola brand to tap the mid-tier.

Read MoreChina's Xiaomi makes strides in smartphone race

"Motorola's strategy to recover its mojo is to cut prices, so Motorola has been delivering models like the E that is a mid-range model with higher features at competitive price points," Mawston said.

"Apple and Samsung have a premium in the higher segment so Motorola has to have an offering in the mid-range."

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