Yang is also aiming to cut the company’s reliance on PC sales.
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Lenovo, the world’s largest supplier of personal computers, said the layoffs will be completed in this quarter to September, eliminating about 10 per cent of its non-manufacturing workforce around the world.
The jobs would go as soon as possible, Yuanqing Yang, chairman and CEO of Lenovo, said in a letter to employees.
The company, which operates in more than 160 countries, will incur US$600 million in restructuring costs and a US$300 million write-off of its smartphone inventory as part of the reorganisation at its mobile business.
The news sent shares of Lenovo, which bought smartphone maker Motorola Mobility and global Business Machines Corp.’s low-end server unit last year, to their lowest level in almost 18 months. Its PC shipment dropped 7.1 percent to 13.5 million.
The $2.8 billion purchase of Motorola from Google Inc. last year has dragged on earnings while giving the company greater exposure to Western markets and another brand to offer Chinese consumers.
“We will reduce costs in our PC business and increase efficiency in order to leverage industry consolidation increase share and improve profitability”. While some had speculated, feared even that a sale of Motorola might mean assimilation of their products into the Lenovo chain, it now seems things are quite different, as Lenovo is hedging their bets on what Motorola puts out, stating that Motorola would be in charge of smartphone design, development, and manufacturing moving forward. It is also restructuring its mobile business group, to pave the way for a simpler product portfolio with fewer smartphone models. The company says it faced “severe challenges” including a slipping PC market and increased mobile competition in China, but characterized its results as “solid”. “So in every moment our product will be competitive”, he said.
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Net income for the quarter ended June dropped 51% to $105 million, Lenovo said in a statement, compared with the $71.7 million average of analyst estimates compiled by Bloomberg. Today, Lenovo is a global corporation with significant operations on si…
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Revenue rose 2.9 percent to US$10.7 billion. The company had previously said it expected to reach $5 billion of annual sales within a year.
