Founded in 1984, Beijing-based Lenovo is the world's fourth-largest PC maker. In May 2005 it took over the personal computing division of IBM in a deal valued at $1.25bn.
But the past year has seen computer sales plummet as the global economic crisis put the squeeze on demand for PCs. The company has also seen its market share eroded by tough competition from the likes of HP.
Lenovo's quarterly profit shrank 78 per cent in the three months ended September 30, and the company said it expected to report a loss for the latest quarter which ended on December 31.
Shares in Lenovo fell 17 per cent in Hong Kong on Thursday following the news.
Trading in the company's shares had been suspended on Wednesday ahead of the announcement.