Lenovo stays in black despite Motorola buy

More than a year after retreating from China, Motorola announced plans to re-enter the world's largest handset market last month, targeting mid-and high-end buyers. Lenovo has said it expects Motorola to be profitable again within six quarters.

Nicole Peng, research director at Canalys China, said the Motorola acquisition will prove a good investment decision for Lenovo, given its improved performance and brand position in 2014.

Lenovo's challenge, she said, is to continue driving the momentum of the Motorola brand while finding the sweet spot for its own Lenovo brand.

Motorola now operates as a separate smartphone brand worldwide while Lenovo set up its own smartphone product line years ago.

"It will be a critical year for Lenovo, to execute a dual-brand strategy which has not yet been proven successful in the smartphone world," she said, adding Motorola will still find it difficult to compete against Apple Inc in the high-end market.

Huge sales of Apple's new iPhone 6 and 6 Plus helped the US giant become the top smartphone maker last quarter, according to Canalys figures. Budget phone maker Xiaomi Corp also outsells Lenovo in the lower-end market.

Liu from Lenovo said the company will focus on online sales to lift smartphone shipments in China. Previously, the company relied on telecom carriers for handset sales, but dramatic cuts in contract phone subsidies from carriers hurt Lenovo's sales last year.