Lenovo is slashing 3200 “non-manufacturing” staff and streamlining its mobile division as it faces “significant” declines in the global PC and tablet market and slowing growth and increased competition in smartphones.
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The announcement came as the group reported its quarterly revenue was $10.7bn for its first fiscal quarter ended 30 June, up 3% on the same period last year but below forecasts.
Looking to expand its portfolio and become a bigger player in mobile, Lenovo acquired Motorola from Google for $2.91 billion less than a year ago.
Revenues rose three per cent year-on-year to 10.7 billion dollars in the second quarter, with PC business contributing 7.3 billion dollars, down 13 per cent year-on-year. The news emerged after Lenovo published its results, which saw operating profit sink by more than 50 percent year-on-year to reach $105 million. “When we emerge from this effort, we will be a faster, stronger, better integrated and aligned global company”.
“Despite this tough environment, Lenovo continued to deliver solid results”, the company said in a statement.
This was the toughest quarter since 2008 for the PC market, Yang said in a phone interview Thursday.
Lenovo was the fifth-largest smartphone maker globally by shipments in the second quarter with 4.5 percent market share, falling from No. 3 in the first quarter, the Journal said, citing data from Counterpoint Research.
The company’s shares – traded in Hong Kong – slipped nearly 7 percent in morning trading as investors had misgivings about speedy progress. The ThinkServer brand that targets small and medium sized enterprises increased over 40 percent.
Lenovo said it was also hurt by “a rapidly shifting technology demand landscape” in the enterprise business, following its purchase of IBM’s x86 server business for US$2.1 billion past year.
Lenovo was hard hit on all its businesses.
Yang told Reuters that Lenovo stands by the acquisition of Motorola, which cost $2.91bn in 2014. The company has set a target to achieve $5 billion in revenue after the close of the System x deal.
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