China’s largest computer maker Lenovo Group Thursday reported disappointing full-year net profits for 2005 of 173 million Hong Kong dollars (22 million US dollars), down 85 percent on 2004 and way below analysts’ expectations.

The Hong Kong-listed company, which last year bought the personal computer business of US computer maker IBM, blamed the steeper-than-expected decline in profit on one-off restructuring costs in its overseas operations.

It said revenue had climbed 359 percent to 103.6 billion dollars but that it had to book a restructuring charge of 543 million dollars due to worldwide restructuring, which involved the relocation of some offices and the cutting of some jobs following the IBM acquisition last May.

Chairman Yang Yuanqing put a brave face on the results.

“Lenovo has met its first-year integration objectives for a smooth transition, stability in the business and profitability in our international operations,” Yang said in a statement.

Analysts, however, were not so easily satisfied.

“The results were much worse-than-expected,” said Wong Chi Man, technology analyst with China Everbright Research.

“The company has not given a breakdown of the results at this stage and we’re not sure yet what dragged down the results other than restructuring costs,” added Wong, who had expected the net profit to come in at 590 million dollars.

Wong said his forecast as well as the forecast of most analysts had already factored in the 100 million US dollars in costs from the restructuring exercise.

“There are two possible reasons (for the sharp fall in net profit). Either net profit fell due to one-off items other than the one declared, or the performance of the overseas business was weaker than expected,” he said.

Wong said competition with rival Dell and other PC makers could have taken its toll on the three months to March performance by Lenovo’s overseas operations.

“The performance of the overseas business has been quite unstable, good at one quarter, bad at some times. So probably the business has been weak in the last quarter,” he added.