Lenovo's net profit fell 38% to USD127m

Here's how bosses plan to bounce back.

According to Maybank Kim Eng, net profit of USD127m (EPS: US1.20¢), up 90% YoY down 38% QoQ, was 17% ahead of consensus.

Here's more:

While we are revisiting the earning and financial models, we remain positive on Lenovo in anticipation of improving structural profitability on better economies of scale, product mix and cost control.

The potential acquisition of IBM’s X-system server/networking will complement its existing networking, storage and cloud computing solutions for enterprises and create shareholder value over time.

This will not only diversify revenue mix but also makes partial use of Lenovo’s untapped cash pool and leverage on its balance sheet, which could further enhance its already impressive 25% ROE.