By Eva Dou 

BEIJING-- Lenovo Group Ltd. posted a disappointing fiscal fourth-quarter profit slump as it works to digest acquisitions meant to broaden its business beyond personal computers.

The Chinese computer maker said Thursday its net profit for the quarter through March fell nearly 37% from a year earlier, missing analysts' expectations.

"We are ready to transform ourselves from making mostly hardware to a combination of hardware and software services," said Lenovo Chairman and CEO Yang Yuanqing in a press release.

Lenovo plans to improve its customer interaction and service offerings this year, the company said in a filing with the Hong Kong Stock Exchange.

Lenovo in October closed its $2.91 billion acquisition of Motorola Mobility from Google Inc. and $2.1 billion purchase of International Business Machines Corp.'s low-end server business.

The company faces challenges this year in integrating the two new businesses as the Chinese smartphone market slows and global spending on servers contracts. Lenovo's mobile and enterprise business units posted losses for the most recent quarter, but the company has previously said it expects both will be profitable within a year and a half.

Geopolitical issues present one challenge for Lenovo, due to wariness between Beijing and Washington over cyberspying and information security. The U.S. Navy is looking at dropping IBM servers from some weapons systems after the Lenovo acquisition, a Navy spokesman told The Wall Street Journal this week. Lenovo is likely to lose server sales in the U.S. and gain them in China due to some customers' belief that local brands are more secure, said Yuanta Securities analyst Vincent Chen.

Lenovo says it continues to sell servers and other products to the U.S. government and will work cooperatively to address concerns any individual agency may have.

Founded in Beijing, Lenovo acquired IBM's PC business in 2005. The company now has headquarters in both the U.S. and China and surpassed Hewlett-Packard Co. to become the world's No. 1 PC maker by shipments last year.

As the global PC market has become saturated, Lenovo has expanded into other sectors including smartphones and servers.

Net profit for the quarter fell to $100 million from $158 million a year earlier, while revenue rose 20.7% to $11.3 billion.

Write to Eva Dou at eva.dou@wsj.com

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