Legend beats estimates on strong sales

By Staff and wire reports

HONG KONG, China -- Computer maker Legend said strong unit sales and higher profit margins enabled it to beat analyst estimates with a first quarter net profit of $32.17 million.

Legend, which controls about 30 percent of China's PC sales, said the profit was 448 percent higher than the figure it posted a year ago.

The company also announced a buy-back plan of an unspecified number of shares during the current fiscal year ending next March.

Legend chief financial officer Mary Ma told reporters at a press conference the plan reflected management's confidence in the company's future earnings prospects and the fact it has the cash to do so.

The Chinese PC giant had net cash reserves of about $296 million at the end of June on a proforma basis.

Ma also said capital expenditures this year would reach almost $154 million.

The computer maker said in a statement it sold 651,000 PCs in the April-June quarter, an increase of 28 percent from the same period last year.

The surge in sales helped Legend main its roughly 30 percent share of China's domestic PC market it had at March 31.

Legend Chairman Liu Chuanzhi said PC unit growth in China will range from 25 to 30 percent annually in the next five years, and expects Legend's growth to be in line with that figure.

Compared with global peers who are expected to post declines this year, sales growth for China's PC giant is expected to be substantial.

Legend strategy

The company also said it took advantage of cuts in the price of components in the period and launched several cutting edge products, including PCs with Intel Pentium 4 microprocessors, at competitive prices.

It also cut costs internally.

"The above strategies have helped to improve the gross profit of the group and helped to maintain average selling prices of products, further consolidating the group's leading position in the market," Legend president Yang Yuanqing said in a statement.

The company said it was also confident in its future business strategy, which would focus on extending the provision of hardware products to the provision of applications and "one-stop" information technology services.

Legend has set itself a goal of selling four million PCs in its current fiscal year -- a goal chief executive Yang acknowledged as "quite a big challenge."

Legend shares responded to the earnings announcement by surging 5.7 percent to close at HK4.175, erasing a morning loss of 0.63 percent before the results were released.

Reuters contributed to this report.