Lenovo is one of China's biggest international brands

Lenovo said net profit in the three months to 30 June was $5m (�2.6m) compared with $45.9m a year earlier.

But the profit beat forecasts and was a sharp improvement on the $116m loss the firm posted in the previous quarter.

China-based Lenovo is now the world's third largest computer maker behind US giants Dell and Hewlett-Packard.

'Weather the storm'

Lenovo bought IBM's loss-making personal computer business in 2005 and has been trying to turn the business around since then.

The company has said it will focus on cutting costs as it faces stiff competition from rival producers.

Analysts said that keeping a tight rein on expenditure may prove vital if other producers such as Dell decide to start cutting prices to lure customers.

"We are fully prepared to be able to weather the storm," said Lenovo boss William Amelio, a former Dell executive.

Lenovo was criticised by many observers for buying the PC business from IBM, but the company said it wanted to boost sales of smaller, portable computers known as laptops or notebooks.

Kay Hian, an analyst at UOB, said that Lenovo was "on the right track to grow their business in the future, as notebook PCs will replace desktops".