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By Bloomberg

Lenovo Group Ltd. surged the most in a year after posting profit that beat estimates, with the Chinese company expanding its global market share for personal computer and smartphone sales.

The shares in Hong Kong rose as much as 8.6 percent, the biggest gain on an intraday basis since January 2014. Net income was $253 million in the quarter ended December, compared with the $182.4 million average of analysts’ estimates compiled by Bloomberg.

Chief Executive Officer Yang Yuanqing is defying weak growth in the PC industry by increasing sales, margins and market share as he expands in smartphones and servers. Lenovo bolstered that push with $5 billion of acquisitions last year, including buying Motorola Mobility from Google Inc. and purchasing International Business Machines Corp.’s low-end server unit.

“The acquisitions are performing as we expected, but PC business profitability was much better, which indicates a stronger presence and ability to obtain profits,” Alberto Moel, a Hong Kong-based analyst at Sanford C. Bernstein & Co., said in an e-mail.

Shares of Lenovo traded 6.3 percent higher at HK$10.82 at the midday break. The stock has gained 6.1 percent this year, outpacing a 3.4 percent rise in the benchmark Hang Seng Index.

Rising Volumes

The purchase of Motorola helped Lenovo boost global smartphone shipments 78 percent in the quarter to 24.7 million units, vaulting into third place worldwide, International Data Corp. said Jan. 29. Its market share expanded to 6.6 percent from 4.8 percent a year earlier, IDC said.

“We are very fortunate that both of the acquired businesses performed pretty well,” Yang said in a phone interview after the results. “Motorola is growing volume very fast -- they almost doubled volume year on year -- and for the first time delivered more than 10 million units last quarter.”

Yang reaffirmed his forecast to end losses at Motorola within four to six quarters.

Lenovo, with headquarters in Beijing and Morrisville, North Carolina, reported sales rose 31 percent to $14.1 billion in the third quarter, from $10.8 billion a year earlier. That compares with the $13.5 billion average of 20 analysts’ estimates compiled by Bloomberg.

“Lenovo’s business segments now are more geographically diversified, and they have a better range of products,” said Ricky Lai, an analyst at Guotai Junan International Holdings Ltd. in Hong Kong. “The company is less dependent on the China market and less dependent on PC products.”

Server Unit

Net income in the period was brought down by about $131 million of non-cash acquisition related accounting charges related to Motorola and the server unit, the company said.

While industrywide global PC shipments rose 1 percent in the quarter ended December, Lenovo posted a 7.5 percent increase, researcher Gartner Inc. reported Jan. 12.

Lenovo’s share of the PC market expanded to 19.4 percent from 18.3 percent a year earlier. Hewlett-Packard Co. was second.

Completion of the IBM transaction made Lenovo the third- largest server vendor in the world behind Hewlett-Packard and Dell Inc., the company has said. The new server unit will hit $5 billion in sales within a year, with margins beating those of the company’s PC unit, Yang said.

Lenovo must focus now on absorbing the two purchases, Yang said in the interview. That means the company doesn’t have energy for another big acquisition, though a smaller deal is possible.

“We expect further share gains in PCs for Lenovo in a consolidating market in 2015,” Raul Barroso, a Hong Kong-based analyst with Cantor Fitzgerald, wrote in a Jan. 28 report. “Lenovo’s ascent in smartphones has been nothing short of impressive.”