CORRECTED-UPDATE 1-Top China PC maker Lenovo's Q2 plunges 78 pct

* Q2 net profit plummets 78 pct on slower shipments

* Outlook gloomy as financial crisis impacts sales

(Adds background, executive comments)

By Joseph Chaney

HONG KONG (Reuters) - China's Lenovo Group Ltd (0992.HK), the world' No. 4 PC maker, posted a 78 percent plunge in quarterly earnings on slower shipments and lower margins, as the global financial crisis crimps appetite for technology products.

But analysts say China's top computer maker, which competes with Hewlett-Packard (HPQ.N), Dell Inc. (DELL.O) and Asian rival Acer (2353.TW), is expected to thrive in the long run due to its commanding share of China's market -- the world's top PC arena after the United States -- and other emerging markets.

Last month, market researcher IDC said personal computer shipments in Asia excluding Japan grew 12 percent to 20.2 million units in the third quarter -- a figure that fell 2 percent short of its forecast for the region.

Corporate-focused Lenovo earned a net profit of $23.44 million in its fiscal quarter ended in September, compared with $105.26 million a year earlier.

The result severely lagged an average forecast for $91.80 million, according to five analysts polled by Reuters Estimates.

Lenovo derived $1.9 billion -- of $4.3 billion in sales -- from greater China during the quarter, and $1.1 billion from the Americas.

For a full statement, please click here 81107099.pdf

Shares in Lenovo plunged 36 percent between July and September, underperforming the 18.5 percent loss on Hong Kong's benchmark Hang Seng Index .HSI over that period, as investor's fled equities in the wake of the financial turmoil.

The stock had lost nearly 2.8 percent ahead of the earnings announcement on Friday.

Last month, Acer, the world's No. 3 PC vendor, said its third-quarter net profit rose 4 percent to T$3.04 billion, lagging analyst estimates for T$3.16 billion.

US WEAKNESS

The United States has been Lenovo's second-largest revenue contributor since it bought IBM's PC unit for $1.25 billion in 2005.