Lenovo, the world's third-largest PC maker, said that profit growth will not be a priority this year and that it is ready to cut prices to keep up with rivals, as it focuses on expanding market share. "For this year, the goal is revenue growth. And we hope profits will improve, but that's not our primary objective," Chairman Yang Yuanqing told Reuters. "This year's profit won't be worse than last year's." Lenovo is facing pressure on margins as it fends off bigger rivals Dell and Hewlett-Packard. Lenovo expects pricing pressures to continue this year. "If others are willing to enter into a price war, we will keep pace," he said. "We are used to using price and many other strategies to compete." The company last week reported a fourth-quarter loss that was almost double consensus market forecasts and suggested no let-up in the intense competition facing the group. Lenovo's annual profit plunged due to costs arising from its $1.25 billion purchase of IBM's PC unit. After incurring costs of about $70 million last year due to the restructuring of its IBM purchase, Yang said such costs would not exceed $30 million for this year. Despite the headwinds, Yang said revenue and profit from China will grow at a double-digit percentage pace. Greater China provides one-third of the company's revenue. In other news: Redmond revs up Vista P2P engine Seeking status in a cell phone Seeking cover in the security dogfight News.com Extra: Apple iBook bursts into flames Video: Undersea volcano's eruption caught on tape Lenovo's sharp loss in the quarter that ended March 31 reduced fiscal-year 2006 profit to $22.2 million from $144.4 million a year earlier. Analysts surveyed by Reuters Estimates on average forecast net profit to reach $168.9 million in the current fiscal year--a more than seven-fold increase. Lenovo has transferred about 1,000 jobs from high-wage areas like the U.S. to low-wage countries like China over the past year, but Yang said he did not expect further lay-offs. "The goal in the first phase is to stabilize operations," he said. "In the second phase we can look at growth." Lenovo eventually hopes to transform itself into a notebook powerhouse by twinning expertise in lower-end PCs with the strength in laptops it bought along with Big Blue's PC assets. Yang said that notebooks accounted for just under 50 percent of group sales last year and that the ratio would exceed 50 percent this year. Lenovo wants to keep the IBM brand for its premium products like the "Think Pad," while boosting its own brand for cheaper products, said Yang.

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