Lenovo Reports Third Quarter 2007/08 Results

Lenovo Group (LNVGY)(0992.HK) today reported strong financial
results for its third fiscal quarter of 2007/08, which ended December
31, 2007. Sales for the quarter jumped 15%, year over year, to US$4.6
billion, driven by double-digit growth in Lenovo PC unit shipments and
sales across all of the Company´s operating geographies. For the
seventh consecutive quarter, Lenovo worldwide PC shipments exceeded
the average growth rate of the global PC market, with year-over-year
growth of 22%, healthily outpacing the industry average growth of 16%.

Lenovo´s segment operating profit margin for the third quarter of
2007/08 was 4.4%, compared to 2.4% in the same period a year ago, and
up 0.4 percentage points sequentially, evidence of the Company´s
operating efficiency efforts. For the third quarter of 2007/08, Lenovo
reported pre-tax income of US$192 million (excluding restructuring)
and basic earnings per share of 1.93 US cents, or 15.01 HK cents. Net
cash reserves as of December 31, 2007, totaled US$2.0 billion.

"Our outstanding third quarter results demonstrate again Lenovo´s
acquisition and integration strategies are correct, with good
execution," said Lenovo Chairman Yang Yuanqing. "Lenovo´s ability to
achieve faster-than-market growth and profitability was a direct
result of the improvements to our competitiveness. In the next phase,
we will maintain our momentum in the relationship business and in the
Greater China region, while pushing forward with our transaction and
consumer business globally, to continue on the path of profitable
growth."

William J. Amelio, Lenovo´s president and CEO, said, "The quarter
illustrates not only our ability to deliver consistent, predictable
performance, but also the PC market´s resiliency. The global PC market
is expected to grow in the double digits in 2008, given strong
outlooks in Asia and emerging markets. We also expect to see an impact
from the recent extension of our product offerings to include
higher-margin products, such as workstations and servers, to further
balance our product portfolio. Despite increasing economic
uncertainties, we remain confident in our ability to continue to
deliver profitable growth that outpaces our industry." Amelio also
cited Lenovo´s diverse sales distribution, where a full 75% of the
Company´s sales are generated outside the Americas.

"We enter 2008 with continuing market momentum and significant
progress against our strategic priorities," said Amelio. "This will be
a key year for Lenovo, as 2008 will mark our first year without IBM
branding on our products. We believe 2008 will be a breakout year for
the Lenovo brand on the world stage, with the implementation of our
new global consumer branding campaign centered around "Ideas" and
sponsorship of the Beijing Summer Olympic Games."

GEOGRAPHIC OVERVIEW

-- Lenovo Greater China posted US$1.8 billion in sales in the
third fiscal quarter, up 16% year over year, as the Company´s
26% growth in PC shipments outpaced the industry average for
the Greater China market. The growth further strengthened
Lenovo´s leading market position in China´s PC market, with a
market share of about 29.0%, up 0.3 percentage points from a
year ago. Lenovo´s growth was fueled by strong shipments of
both large enterprise desktop computers and consumer PC
notebook shipments. China business accounted for 40% of total
sales in the quarter.

-- The Americas accounted for US$1.2 billion in sales in the
third fiscal quarter, or 25% of total sales. The continued
rollout of the transaction-based sales model contributed to
success in the region, which experienced double-digit volume
and sales growth year over year. (The transaction-based sales
model targets consumers and small business customers.) Lenovo
PC shipments in the Americas during the quarter increased 15%,
despite increasing economic uncertainty and turmoil in the
credit and equities markets in the U.S.

-- In the Europe, Middle East and Africa region (EMEA), shipments
jumped a robust 24% in the third fiscal quarter. For the same
period, sales totaled US$1.1 billion, or some 24% of total
sales.

-- Asia Pacific (excluding Greater China) PC shipments increased
20% in the third fiscal quarter. Sales in Asia Pacific totaled
US$535 million in the third quarter, or 12% of total sales.

PRODUCT OVERVIEW

-- Lenovo´s Notebook computers continued to be the largest
contributor to total sales. Notebook shipments in the third
fiscal quarter were up 38% year over year, and sales were
US$2.6 billion, or 56% of total sales for the quarter.

-- In the quarter, Lenovo´s Desktop shipments rose 12% year over
year, posting strong volume and sales share gains. Sales were
US$1.8 billion in the quarter, or 40% of total sales.

-- Shipments of Lenovo´s Mobile Handsets, conducted primarily in
China, showed a decrease of 31% in the quarter. Handset
shipments generated sales of US$108 million, or 2% of total
sales, as the handset business continues to represent a
smaller portion of total sales.

Lenovo Group today announced that it has signed a conditional
sales and purchase agreement to sell its entire interest in its mobile
handset business to a private equity group led by Hony Capital, the
private equity arm of Legend Holdings, for US$100 million. The
transaction is conditional upon Lenovo independent shareholder
approval. The business sells mobile handsets and related equipment
predominantly in China. This agreement helps support Lenovo´s
long-term strategic priorities by enabling the Company and its
management to focus on its core PC businesses while enabling the
handset business to operate independently and set its own strategic
direction.

ABOUT LENOVO

Lenovo (HKSE: 992) (ADR: LNVGY) develops, manufactures and markets
high-quality, secure and easy-to-use technology products and services
worldwide and is dedicated to building the world´s best-engineered
personal computers. Formed by Lenovo Group´s acquisition of the former
IBM Personal Computing Division, Lenovo´s heritage in both emerging
and developed markets has resulted in a New World Company business
model where ideas, operations and resources are borderless and mobile.
With four operational hubs in Beijing, Raleigh, Singapore and Paris,
Lenovo has major research centers in Yamato, Japan; Beijing, Shanghai
and Shenzhen, China; and Raleigh, North Carolina, as well as a
marketing center in Bangalore, India. For more information, see
www.lenovo.com

LENOVO GROUP

FINANCIAL SUMMARY

For the fiscal quarter and nine months ended December 31, 2007

(in US$ millions, except per share data)

-0-
*T
Y/Y 9 months Y/Y
Q3 Q3 % ended %
07/08 06/07 CHG 12/31/07 CHG
------------------------------ --------------------- -----------------
Sales 4,602 3,998 15.1% 12,960 16.0%
------------------------------ --------------------- -----------------
Gross Profit 702 542 29.6% 1,954 28.6%
------------------------------ --------------------- -----------------
Gross Profit Margin 15.2% 13.5% 1.7 pts 15.1% 1.6 pts
------------------------------ --------------------- -----------------
Operating Expenses (521) (471) 10.8% (1,531) 11.1%
------------------------------ --------------------- -----------------
Operating Expense Margin 11.3% 11.8%(0.5) pt 11.8%(0.4) pt
------------------------------ --------------------- -----------------
Other Income / (Expenses)* 11 (5) N/A 16 219.3%
------------------------------ --------------------- -----------------
Pre-Tax Income before
restructuring cost 192 66 189.9% 439 202.1%
------------------------------ --------------------- -----------------
Restructuring Costs (2) (2) (30.0)% (48) 103.6%
------------------------------ --------------------- -----------------
Pre-Tax Income 190 64 197.8% 391 221.3%
------------------------------ --------------------- -----------------
Profit Attributable to
Shareholders 172 58 197.5% 344 241.0%
------------------------------ --------------------- -----------------
EPS (US cents)
Basic 1.93 0.67 188.1% 3.95 237.6%
Diluted 1.76 0.64 175.0% 3.63 218.4%
------------------------------ --------------------- -----------------
EBITDA** 244 128 90.8% 636 113.4%
------------------------------ --------------------- -----------------
*T

* Including other income-net, finance income, finance cost and
share of profits/(losses) of associated companies

** Excluding restructuring charges