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Last Updated: Thursday, 25 May 2006, 10:44 GMT 11:44 UK
Lenovo blames loss on IBM PC deal
Potential customer trying out Lenovo laptop
Like all computer firms, Lenovo has dropped its prices
Lenovo has reported a quarterly loss almost twice as high as market forecasts, blaming costs caused by its purchase of IBM's PC arm.

For the three months to 31 March, the Chinese computer firm made a net loss of $116m. A year earlier, it had turned a profit of $21m.

Its $1.25bn (668m) takeover of IBM's PC business was announced in December.

Lenovo is now the world's third largest computer-maker, following behind US giants Dell and Hewlett-Packard.

'Smooth transition'

Its profits for its full financial 12 months were also hit by the cost of bringing in the IBM business.

Net profits for the year to 31 March totalled $22m, down from $144m a year earlier.

Annual revenues rose more than fourfold to $13bn.

In addition to the cost of assimilating the IBM business, Lenovo's profits have also been hit by a fierce pricing war within the computer sector.

Lenovo chairman Yang Yuanqing said the merging the IBM business had been a "smooth transition".

Back in March, Lenovo announced 1,000 job cuts as a means to improve its efficiency.

It was also announced that Lenovo has signed an advertising agreement with Spanish football club Barcelona.

Leading Barcelona player and Brazilian international Ronaldinho will advertise Lenovo computers in television advertisements in China over the next six months.

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