PC shipment in the American market, however, fell by 9 per cent, earning a revenue of US$1.1 billion only.

Golden Sachs had lowered Lenovo's earning forecast for 2006-07 and 2007-08 by 19 per cent and 16 per cent to HK$1.08 billion and HK$1.58 billion, respectively.

It is still cautious about when Lenovo would be able turn around its overseas business. "Lenovo's performance outside the mainland is still sluggish, and benefits from its restructuring are still in the air," the Golden Sachs report said.

Lenovo's management, however, is firm about the company's future. "We have foreseen the difficulties... especially after the buyout of IBM's PC business," Lenovo chairman Yang Yuanqing said.

"Its current performance is in line with our expectation... Reform is a painful experience and we hope the investors remain patient and confident about the company' restructuring results."

Deutsche Bank shared Yang's views, saying: "While the road ahead will be bumpy, we believe Lenovo is on track."

BNP Paribas kept its 2006-2007 earning forecast unchanged, saying the company's profit "is expected to bounce back from the second half of 2007-08 fiscal year."

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