As The Wall Street Journal reported today, Lenovo’s profits rose by 88 percent, and it eclipsed Dell as the world’s No. 2 manufacturer, behind Hewlett-Packard. The company has been growing in part through acquisitions — it recently paid 465 million euros (about $640 million) for the German PC outfit Medion — but also by playing well in markets where people are still buying their first PCs, says Peter Hortensius, the president of Lenovo’s Global Product Group.

Lenovo’s results did good things for shares of rival HP, which last week announced that it will keep the PC unit it had previously considered spinning off. Its shares rose 1.8 percent to $26.06. Shares in Dell rose more than 1 percent to $15.29, while Intel fell 17 cents, or less than 1 percent.

Hortensius told me that much of Lenovo’s strength comes from being the top vendor in the world’s leading market, China, and also in its No. 3 market, Japan. In the world’s No. 2 market, the U.S. — not so much. Lenovo is fifth there, but that’s an improvement from prior periods, he says.

Another strength he noted is in emerging markets like Brazil, where lots of people are still buying their first device and just getting their first Internet connection and not ready to think about buying tablets or smartphones just yet. But Lenovo’s a big player there, too, and sells Android based smartphones and tablets in China. It also plans to sell tablets running Windows 8 when it’s released. And as part of a four-screen strategy, he said, the company will have more to say on the subject of smart TVs soon.

What it doesn’t have, at least in the U.S. yet, is a strong brand presence. And so it has crafted a marketing campaign around “people who do.” So what do you do when you need to get attention for a less-well known PC brand? You drop a laptop out of a plane, naturally. Of course there was a technical reason for doing it: Proving that the machine could boot up in time to deploy a parachute and land safely, though I have to wonder just how soft that landing was in reality. I embedded the spot below just because it looks cool.

In a research note to clients today, Goldman said that while most tech companies should report results in line with their forecasts, the forward guidance they give will be less than optimistic. “While we expect most of the September quarter companies to be able to meet expectations for the quarter, we also expect an increasingly cautious tone from all of the companies, and we continue to see risk to 2012 consensus estimates for nearly all of the names in our space.”

To that end, Goldman revised its PC unit sales forecast downward. Following the latest PC market data from the research firm IDC, Goldman says the demand environment for PCs is “even more difficult than we had previously envisioned.”

Slower spending, the end of a PC refresh cycle and cannibalization by the tablet market — which we all know is really just an iPad market — has prompted Goldman to slash its PC unit sales growth forecast to 2.1 percent for 2011; 4.3 percent in 2012; and 6.9 percent in 2013. The iPad 3, already said to be in production and expected early next year, won’t give the PC makers any help.

One key problem PC makers face is pricing: In order to avoid being stuck with unsold inventory, manufacturers, resellers and retailers will be forced to slash their prices to the bone and then some, which will hurt their already-thin profit margins. This is why Goldman rates Dell — now the No. 3 PC maker, behind Hewlett-Packard and Lenovo — a “sell” right now. Goldman expects the average selling price on PCs to drop nearly 3 percent in 2011, and more than 9 percent in 2012.

The exception to its tech pessimism? Apple, naturally. Reporting its results on Oct. 18, Apple isn’t suffering from the economic headwinds. Goldman expects Apple to sell 13 million iPads in the quarter, which would represent growth of 211 percent year over year.

Goldman expects Apple to report earnings of $7.30 per share on $28.7 billion in sales, but admits that could be conservative, because who knows how good today’s launch of the iPhone 4S will turn out? As Goldman puts it: “Indeed, if iPhone units are flat sequentially, this would support earnings per share of approximately $8.00 for the quarter.”

The end of the search comes just as suddenly as it began, with Dirk Meyer’s surprise resignation in January. The search was a tough one, in no small part because AMD — whose business is already complicated by the fact that it has to compete with Intel — is widely seen as missing the boat on key new markets like mobile computing and tablets.

It’s equally surprising that there were no leaks about this hiring, though word had circulated that several A-list executives had been approached and turned the job down. Among them: Pat Gelsinger, COO of EMC and a former CTO of Intel, said no twice; both Michael Capellas, the former CEO of WorldCom and Compaq, and William Nuti, CEO of NCR, turned down AMD’s inquiries.

So, who is Rory Read? His bio at Lenovo says he led that company’s American unit to a $140 million surge in profitability in 2007, and revenue grew 14 percent on his watch. Before that, he spent 23 years at IBM — remember that Lenovo bought out IBM’s PC division for $1.75 billion in 2005.

AMD shares rose 10 cents, or more than 1.5 percent, as of 10:40 AM Eastern time.

The unit’s head and likely CEO in a spinoff scenario, Todd Bradley, took to Bloomberg TV’s airwaves yesterday for an extensive interview with hosts Emily Chang and Cory Johnson. The 13-minute segment is below.

Among the highlights: Johnson’s setup, wherein he quotes Hewlett-Packard co-founder David Packard as saying, “The only thing worse than a shitty business is a big shitty business,” and Bradley’s blunt refusal to answer when Chang asks if he endorsed the move to “explore strategic options” for the PC business.

Bradley also insists that the unit would sell at a higher valuation than 0.25 times sales, which would be about $10 billion. Most analysts say the unit would be valued at a fraction of the trailing year’s sales. The valuation argument may be moot now that Samsung, the most logical buyer, says it’s not interested, thus making a spinout more likely.

Later, Chang asks why HP isn’t giving the TouchPad and other webOS devices more of a chance in the marketplace. (Um, because sales were dismal?) She goes on to ask Bradley about his professional plans, about which there has been constant speculation since The Wall Street Journal reported in March that he had been recruited by Intel.

Bradley reiterates that he’s interested in running the independent PC company that might result from a spinout, and flatly denies that he’s looking for a new job somewhere else, then proceeds to paint a sunny picture about the PC unit’s prospects: “The PC market is only about 25 percent penetrated,” he says. He has a point, until you consider that many people might skip them altogether and move straight to tablets and smart phones.

Lenovo CEO Yang Yuanqing’s first response to Apple’s achievement? To dismiss it. In his view, any comparison of the two companies’ revenues is incongruent.

“That is not an ‘apples to apples’ calculation,” he said. “Their calculation includes the phone business but Lenovo’s main focus is in PCs; our phone business isn’t that strong even in China.”

But then that’s sort of the point, isn’t it? If that business were stronger and Lenovo’s Android-based Lephone was better established in the market, Yang might not have cause to take issue with the assertion that Apple’s sales have overtaken Lenovo’s own. The fact is that Cupertino’s third-quarter sales in greater China hit $3.8 billion, and Lenovo’s did not.

But Yang intends to change that, and soon, with a portfolio of Android and Windows tablets that he hopes will end Apple’s domination of the tablet market. “We will be one of the strongest of the players in this area,” Yang told the Financial Times.

But how, when even once-promising tablet challengers like Hewlett-Packard’s webOS-based TouchPad have failed so miserably? By targeting every single stratum of the tablet market.

“Apple only covers the top tier,” Yang explained. “With a $500 price you cannot go to the small cities, townships, low salary class, low income class. … Apple is very strong, but when IBM created the PC market there was just IBM; if you look at the PC industry now it is very diversified. I believe that will happen in tablets as well.”

It wasn’t until dinner this past Sunday night that CEO Léo Apotheker told Todd Bradley, the head of its Personal Systems Group, that he was about to push key parts of Bradley’s huge unit off the cliff.

That included stopping selling hardware — smartphones and TouchPad tablets — based on the webOS it acquired from Palm last year, a $1.2 billion deal that Bradley played a big part in.

In addition, HP said it was considering spinning out its PC business and would “explore options to optimize the value of webOS software going forward.”

But, until a few days ago, several sources close to the situation said, Bradley knew nothing of these plans and neither did webOS’s key driver of late, former Palm CEO Jon Rubinstein.

This surprising lack of disclosure by HP to two of its key execs begs the question: Will they stay or will they go now?

According to sources, staying put is the plan for both for now, although it depends on what such a spinoff will look like.

It’s clear at this point that Bradley — who was once the CEO of Palm himself and was once considered the most likely successor to former CEO Mark Hurd, before Hurd’s sudden resignation last year — is the leading CEO candidate of its spun-out independent PC company if that’s what HP decides to do.

But it’s not a lock, either. And, apparently, Bradley has not been locked in with regards to a spinoff either and would likely have a lot of offers from tech companies in Silicon Valley to choose from if he wanted.

“Who will they get if Bradley goes at this point, if they want to spin it off?” said one person at the company.

But, added another: “Bradley is in the catbird seat if he wants to be and it’s his to lose.”

That depends, of course, on what his is.

Questions include:

Will that new company include any of the consumer part of the printer business — a huge cash cow — if HP is indeed leaving the arena?

Will webOS go with the new set-up, so that it can take advantage of the patents and licensing income?

Will HP continue to be the brand name on the devices this computer company spinoff would make?

These are just a few of the issues in a deal of untold complexity. But perhaps the most obvious one is who would get custody of Rubinstein?

To begin: Bradley is a big fan and would certainly want him around if there were a spinoff, said several sources.

But to do what?

Rubinstein, a well-known tech exec, had been leading the webOS efforts for HP, but was recently moved upstairs to a larger but fuzzy role, to run product development and innovation for the PSG unit. He has been reporting to Bradley.

At the time, the move was seen by many as the first step out the door by Rubinstein, with one person joking that “he’d much rather be at his Mexican beach house than HP.”

Among the disgruntlements: Several sources said Rubinstein felt that TouchPad wasn’t ready to ship and that Apotheker has reneged on a public promise not to until the tablet was “perfect.”

That ire is no surprise, since the device was then subject to tough criticism, including by AllThingsD’s Walt Mossberg, who noted in his review:

“… In my view, despite its attractive and different user interface, this first version is simply no match for the iPad. It suffers from poor battery life, a paucity of apps and other deficits.”

In addition, unlike others there, Rubinstein has been more of a product guy and not an HP lifer. That begs the question of whether he’d like to sign up to another big company stint, even if he had more control.

“He’s been to that party before, and the reality is that he is not a career big company person,” said one person.

One important note: Rubinstein was unable to make webOS work when Palm was already a standalone independent company. And, although a new HP spinoff would be huge and better funded, it is still very much an uphill and competitive battle on the computer, smartphone and tablet fronts.

In addition, keeping a competitive operating system going is also a costly bear of an issue.

“It’s a cyclical, high-velocity business and there are other huge players from Apple and Google in smartphones and tablets to Lenovo and Dell in PCs,” said another source. “There might be a lot of great products in the pipeline for webOS, but it will not be easy to make them a success.”

That said, noted another person who knows Rubinstein well, “he really cares about webOS and does not want to see it go away.”

That might be true, although that is just what might happen if HP decides to sell it off to someone else or makes the spinoff a difficult endeavor.

In that case, it’s an offer Bradley and Rubinstein can refuse.

Related posts

• Hewlett-Packard Says Goodbye to PCs, webOS
• HP Pulls Plug on webOS Hardware, Leaves OS Future in Doubt
• HP And webOS: But They Seemed So Happy Together!
• Liveblogging HP’s “Everything Including the Kitchen Sink” Conference Call
• HP’s Apotheker: We Struck Out with WebOS, but Maybe Someone Else Wants a Swing?
• Viral Video: Like Palm’s Creepy Naked Lady, TouchPad’s Floating Celeb Heads Get the HP Boot
• Licensing webOS May Not Be Much of an Option for HP
• Hewlett-Packard’s PC Business: What Happens Next?
• Worth More Dead Than Alive: Could HP Turn a Profit on Palm’s Patents?
• With HP’s Raising of the World’s Biggest White Flag, Will Jon Rubinstein and Todd Bradley Surrender Too?

The results come as PC makers benefit from a wave of companies upgrading their computer hardware. Lenovo has also benefited from business in China and other emerging markets, where demand is outperforming a weak consumer segment in the U.S. and other developed markets.

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The company is announcing both a consumer model, the IdeaPad Tablet K1, and a more business-oriented product, the ThinkPad Tablet. The former features support for Netflix and a range of included entertainment software, while the latter features pen support and an optional plug-in keyboard dock. Both products have 10-inch screens, start at $499 and will go on sale in August, with pre-orders being taken starting on Wednesday.

“Tablets are extremely personal technology devices,” Senior VP Liu Jun said in a statement. “That’s why we’ve created a family of tablets that has something for everyone, including entertainment-friendly features and content for consumers, or business-friendly features to enhance productivity for professionals as well as security and manageability for IT managers.”

The IdeaPad includes 32GB of memory, while the ThinkPad Tablet comes with 16GB of memory and includes a variety of features aimed at offering business-level security and reliability. The initial ThinkPad model is Wi-Fi only, but Lenovo said 3G models are also in the works and should come shortly after the first ThinkPad Tablets hit the market.

Lenovo is planning its own Lenovo App Shop to provide access to apps customized and tested for its hardware as well as to allow businesses to serve up programs privately to their users.

The company is just the latest big name announcing plans for an Android tablet. Sony is also hoping to prove that taking one’s time can pay off, with its first Android tablets — the slate-shaped S1 and clamshell S2 — not expected until this fall.

The question is just how big the market is for Android tablets, at least at this juncture, with few apps available and a number of hardware makers already selling products, including Motorola, Acer and Samsung, to name just a few.

Lenovo also has plans for a new Windows 7 tablet, the IdeaPad Tablet P1, due in the fourth quarter.

Of course, as president of Lenovo’s product unit, Hortensius has been looking at Windows 8 for a lot longer than the rest of us, most of whom got their first glimpse of the new Windows when it was shown on stage at D9 on Wednesday.

“It’s definitely going to be a big, bold move,” Hortensius said.

Hortensius said that Windows 8 will appeal to those who buy traditional PCs, will make those devices better and will also open up new opportunities with new kinds of machines based on ARM processors.

“You will see both the ARM platforms and the base Intel platforms get substantially better,” he said. “We find that very exciting.”

In particular, Hortensius pointed to the ability of Windows 8 machines not only to resume quickly from sleep, but also to maintain a network connection so they are also quickly usable.

“The part that makes me most excited is not just the new look, but along with that comes features like always-on, always-connected, which really to me addresses a big sore point of the traditional PC,” he said. “I have to boot it and I have to then restore connections.”

Hortensius said he isn’t too worried that businesses will be scared off by the new tiled start-screen that accompanies the traditional Windows desktop. Nor does he think it is that big a deal that Microsoft isn’t allowing customers an option of just booting into a more traditional Windows desktop.

“If business customers want that, they already have that,” he said. “It’s called Windows 7.”

But, as many doors as it sees being opened by Windows 8, Lenovo is also expanding its bet on Android. The company has already launched a couple of products in China, but is preparing a number of Honeycomb-based tablets for a global launch this summer.

One area Lenovo is exploring is the notion of incorporating a pen back into tablet computing.

“What you are doing right now, you could not do with your finger,” Hortensius said, pointing to the fact that I was taking handwritten notes. “The touch interface is amazing. If you are trying to quickly look through stuff it is wonderful. There are a lot of other instances where you clearly would rather use a pen.”

As for having to support multiple operating systems, Hortensius said that is probably just a fact of life.

“I think that’s the new world,” he said.

In a repeat of a trend seen last quarter, both firms report that the market shrank in the first quarter of the year. This would constitute the first market contraction in six quarters, and the first since the onset of the recession. They differ, however, on the size of that contraction: IDC pegs it at 3.2 percent since the first quarter of 2010; Gartner at 1.1 percent.

To be fair, let’s remember that the first quarter of the year is always seasonably slow for PC purchases because two things tend to happen in the fourth quarter: Consumers splurge on gifts for family and frankly for themselves too, and take advantage of crazy deals offered by retailers desperate to clear out their inventory. On the business side, some CIOs take the opportunity to use up unspent funds in their budgets, and get employees starting off the new year with a fresh new machine at their desks. However, this tendency is just as often offset by the start of a new budget year. Whichever way you slice it, the first quarter is always weak on consumer sales though a bit stronger on the enterprise side.

So what happened? The iPad 2, for one thing. “With the launch of the iPad 2 in February, more consumers either switched to buying an alternative device, or simply held back from buying PCs,” is how Mikako Kitagawa, principal analyst at Gartner, put it. “We’re investigating whether this trend is likely to have a long-term effect on the PC market.” Ya think?

Bob O’Donnell, IDC’s vice president for Clients and Displays, wasn’t quite as willing to blame the iPad: “Slower than expected commercial growth in the first quarter failed to offset the ongoing challenges in the consumer market,” he said in a statement. “While it’s tempting to blame the decline completely on the growth of media tablets, we believe other factors, including extended PC lifetimes and the lack of compelling new PC experiences, played equally significant roles.”

Jay Chou, another IDC analyst put it much more succinctly: “‘Good-enough computing’ has become a firm reality.”

The picture gets no better when you look at regional results. IDC says shipments declined in the U.S. by 10 percent. Gartner pegged it at 6 percent. It was, Gartner noted, the third consecutive quarter for year-on-year declines in U.S. notebook sales. Shipments in Europe contracted too, and Japan, which was already expected to be a weak market this quarter, has other things on its mind since the devastating earthquake and tsunami. Asia was the only bright spot, where shipments increased by 5.6 percent in IDC’s forecast and 4.1 percent in Gartner’s. China, IDC noted, failed to reach double-digit growth, and consumers in India, Gartner says, were distracted by the Cricket World Cup. Okay, then.

So how do the numbers look? Since IDC’s forecast is the most dire, I’ll start there:

The worldwide demand for PCs was 80.6 million units. Hewlett-Packard sold 15.2 million; Dell, which just made it back to second place, shipped 10.3 million; Acer 9 million; Lenovo 8.2 million; Toshiba 4.8 million; while “others” clocked 33 million. All vendors except for Lenovo saw declines. The worst decline was Acer’s, whose shipments fell nearly 16 percent. (Now we know why its CEO Gianfranco Lanci lost his job.) Lenovo, on the other hand, saw its shipments improve by more than 16 percent.

Demand in the U.S. was 16.1 million. HP led with 4.3 million, Dell 3.7 million, Toshiba 1.6 million, Apple 1.4 million and Acer 1.3 million. Unnamed others sold 3.7 million. Acer saw its shipments fall by an alarming 42 percent. Apple and Toshiba posted gains of 9.6 and 10.4 percent respectively. HP and Dell both saw declines.

Now let’s look at Gartner’s numbers (remember that each firm tracks the market a little differently):

Gartner pegged the worldwide market at 84.2 million units. It says HP sold 14.8 million, Acer 10.9 million, Dell 10 million, Lenovo 8.2 million, Toshiba 4.8 million. (Clearly there’s a difference in how they see Acer and Lenovo’s performances.)

In the U.S., Gartner estimated the market at 16.1 million units. By its reckoning, HP sold 4.2 million, Dell 3.6 million, Acer 1.8 million, Toshiba 1.7 million, Apple 1.5 million, others 3.3 million.

Lenovo’s net profit in its fiscal third quarter, which ended Dec. 31, was up 25% to $99.65 million, on $5.81 billion in revenue, thanks in part to lower component costs. Executives say they will focus on new products such as the Lepad tablet PC, due for release in China this quarter and overseas in June, and on expanding the company’s mobile-Internet business.

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