Nov. 1 (Bloomberg) -- Lenovo Group Ltd., the world's third- biggest maker of personal computers, almost tripled fiscal second-quarter profit, beating analysts' estimates, after reducing jobs and winning market share.

Net income for the three months ended Sept. 30 rose to $105.3 million, or 1.12 cents per share, from $38 million, or 0.43 cents, a year earlier, the Raleigh, North Carolina-based company said in a statement to the Hong Kong stock exchange. Five analysts had a median profit estimate of $72 million in a Bloomberg survey by telephone and e-mail.

Chief Executive Officer William Amelio has expanded outside China to target customers from Hewlett-Packard Co. and Dell Inc., and cut costs by reducing jobs. Lenovo, Asia's biggest PC maker, plans to increase sales of laptops to consumers, a market that researcher IDC says is growing three times faster than the corporate segment.

``Lenovo is doing all the right things -- it's gaining market share, increasing PC shipments and controlling costs -- and that's showing in the results,'' said Jack Tse, a Hong Kong- based analyst at Bear Stearns Asia Ltd. Tse rates the stock ``outperform'' with a target price of HK$8 by the end of 2008.

Lenovo shares fell 2.1 percent to HK$8.55 at the end of trading in Hong Kong, before the earnings were announced. The stock has almost tripled this year, compared with a 58 percent gain in the benchmark Hang Seng Index. Lenovo's third-quarter sales rose 20 percent from a year earlier to $4.43 billion.

Global PC Shipments

The Chinese company, which moved its headquarters to the U.S. after acquiring International Business Machines Corp.'s PC unit in 2005, joined market leader Hewlett-Packard and Acer Inc. in raising shipments by double digits in the third quarter. Dell, the world's second-biggest PC maker, was the only one of the top five with single-digit growth.

Lenovo's global PC shipments in the three months ended Sept. rose 23 percent, giving it an 8.2 percent market share, compared with 7.7 percent a year earlier, Framingham, Massachusetts-based IDC said last month.

The computer maker plans to sell laptops to consumers in the U.S., France, Russia and South Africa starting January, Chairman Yang Yuanqing said in an interview on Sept. 8. Lenovo lags behind Hewlett-Packard and Dell in the consumer market, IDC says.

Market Share

The Chinese company faces growing competition from Taipei, Taiwan-based Acer, which has closed the gap in market share in the past year and could overtake Lenovo with its purchase last month of Gateway Inc., which may bolster its presence in North America. Gateway is the fifth-largest computer maker in the U.S.

As part of the acquisition, Gateway will exercise its right to bid for Packard Bell BV, pushing out Lenovo who was also in talks to acquire the European PC maker.

``We see there will be more consolidation in the industry,'' Amelio told reporters in Hong Kong today. Lenovo is ``interested'' in Packard Bell, but is no longer in talks with the European company, he said.

Acer boosted its global market share to 8.1 percent in the third quarter from 5.9 percent a year earlier, according to IDC. Palo Alto, California-based Hewlett-Packard widened its market share to 19.6 percent from 17 percent, while Dell's narrowed to 15.2 percent from 16.9 percent, the researcher said.

Hewlett-Packard raised shipments 33 percent in the quarter, while Acer's climbed 59 percent and Dell's increased less than 4 percent.

Greater China

Sales in the Greater China region accounted for $1.8 billion, or 41 percent, of Lenovo's revenue in the three months through September, up from 39 percent a year earlier, giving the company a 36 percent share of the market, according to the statement.

In the fiscal first half, Lenovo's PC shipments in the Americas rose 12 percent from a year earlier and made up 27 percent of total sales.

Dell is the market leader in the U.S. with a 28 percent market share in the quarter ended Sept. 30, followed by Hewlett- Packard with 24.3 percent. Lenovo and Acer aren't ranked in the top five vendors in the U.S., according to IDC.

Lenovo's second-quarter result included a charge of $28 million from the company's decision to drop the IBM brand in its products, Chief Financial Officer Wong Wai Ming said today.

The Chinese computer maker gained the right to use the IBM brand for five years as part of its acquisition of the U.S. company's PC unit in 2005. By voluntarily giving up the right early, Lenovo is required to write down the value of the asset, Wong said, resulting in the charge.

Lenovo plans to pay an interim dividend of 3 Hong Kong cents, compared with 2.4 Hong Kong cents a year earlier.

To contact the reporter on this story: Janet Ong in Beijing at jong3@bloomberg.net

Last Updated: November 1, 2007 11:08 EDT