UPDATE 2-Lenovo posts first loss in 3 yrs, CEO resigns

* Q3 net loss $96.7 million - bigger than analysts forecasts

* CEO resigns as 3-year contract ends

* Company aims to expand sales to low priced consumer segment

* Q4 to be hit by restructuring cost

* Stock falls 2.6 pct in stronger market (Adds comments from news conference)

By Nerilyn Tenorio

HONG KONG, Feb 5 (Reuters) - Personal computer maker Lenovo Group (0992.HK) posted its first loss in nearly three years and its CEO resigned, as weak demand and cut-throat competition slams earnings of technology companies.

Analysts say a recovery for the world's fourth-largest PC maker, which competes with Hewlett-Packard (HPQ.N), Dell (DELL.O) and Acer (2353.TW), depends on how it manages to switch to the low-priced consumer market from corporate clients, which account for the bulk of its sales.

"The outlook is not rosy. A China recovery is nowhere in sight," said Joseph Ho, telecom analyst at Daiwa Securities. "The push into emerging markets and the commercial segment will take time (to show significant outcome)."

China's largest maker of personal computers said the next several quarters would remain very challenging for it and the sector as demand falters in an economic downturn.

Lenovo expects to save $300 million in the year to March 2010 from a restructuring involving axing 2,500 jobs worldwide, cutting executive pay and consolidating its China and Asia-Pacific operations into a single division.

The company reported an October-December loss of $96.7 million, worse than a wide range of analyst forecasts ranging from a $8 million loss to a $96 million loss.

Sales fell by a fifth and Lenovo's gross profit margin was squeezed by a continued market shift to entry level PCs, aggressive pricing and currency fluctuations, the company said.

For an earnings Graphic, click: here

For result statement, click: here 0205223.pdf The quarterly loss was Lenovo's first since January-March 2006, when it posted an $89 million loss on restructuring costs.

Its shares ended 2.7 percent at HK$1.46 lower in a broader Hong Kong market up 0.9 percent. The stock has lost 78 percent from its 52-week high of HK$6.75.