UPDATE 2-China's Lenovo Q3 beats consensus; to sell mobile arm

(Adds details, sale of cellular arm, company's comment)

By Judy Hua and Edwin Chan

HONG KONG, Jan 31 (Reuters) - Lenovo Group Ltd (0992.HK: Quote, Profile, Research, Stock Buzz) beat expectations by nearly tripling quarterly earnings, riding strong demand for PCs in Asia, but the world's No.4 PC maker faces a tough 2008 as a U.S. slowdown threatens to curb spending.

Lenovo, which commands a third of the booming Chinese market and leads Asia in computer sales, is making inroads into a fiercely fought, unfamiliar U.S. consumer arena even as worries mount of a sharp deceleration in IT spending there.

"That's the risk. But if emerging markets continue to be robust, hopefully that should offset any weakness," said Bear Stearns analyst Jack Tse, maintaining an "outperform" rating on the stock. "China hasn't seen any slowdown yet."

Analysts say Lenovo, which bought IBM's (IBM.N: Quote, Profile, Research, Stock Buzz) loss-making PC arm in 2005, should fare better than larger rivals Hewlett-Packard Co (HPQ.N: Quote, Profile, Research, Stock Buzz), Dell (DELL.O: Quote, Profile, Research, Stock Buzz) and Acer (2353.TW: Quote, Profile, Research, Stock Buzz) because of its dominant Asian presence.

Lenovo is expected to post full-year net profit of HK$2.8 billion, more than twice last year's US$161 million, according to Reuters Estimates.

Trading in its shares was suspended on Thursday morning. The firm said it applied to have them resume trading later.

The firm, which derived 40 percent of its revenue from greater China, posted October-December net profit of US$171.75 million versus US$57.7 million a year ago.