Story image

Lenovo cuts 3200 staff, streamlines mobile division

13 Aug 15

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.

The news came as Lenovo reported a three percent increase in quarterly revenue to US$10.7 billion for Q1, but a 51% drop in net income year on year to US$105 million.

The company also flagged a rapidly shifting technology demand landscape in the enterprise market as one of the ‘severe challenges’ it faces in its main markets.

Last year Lenovo spent US$2.9 billion to acquire Motorola in order to strengthen its play in the mobile space. However, in its financials announcement, Lenovo noted that intensifying competition had hurt Motorola’s profitability in particular.

While the company says its latest financial results were ‘solid’ despite a ‘tough’ environment it says the results didn’t meet expectations, prompting ‘broad, decisive actions’ including better aligning its businesses and significantly reducing costs, in order to return to profitable, sustainable growth.

“Last quarter, we faced perhaps the toughest market environment in recent years, but we still achieved solid results,” Yuanquig Yang, Lenovo chairman and chief executive, says.

“Our PC business remained number one for the ninth straight quarter. In the smartphone business, our strategic shift from China to the rest of the world has paid off.”

He says the company will further integrate elements of its acquisitions with its legacy businesses in mobile and enterprise.

In a letter to his staff, Yang says while the company has delivered ‘solid’ results in many areas, it still faces challenges and must be ‘proactive and decisive now… so that we can deliver profitable sustainable growth and achieve our long-term goals.

Yang says the 3200 staff cuts amount to 10% of the non-manufacturing headcount and about 5% of the total staff count worldwide.

The cuts are part of a boarder effort to reduce expenses by about $650 million in the second half of this year, and about $1.35 billion on an annual basis.

Yang says Lenovo will have ‘a much simpler more streamlined product portfolio with a reduced number of clearly differentiated models’.

He says the company will also focus and reposition its enterprise business ‘to attack the most relevant and attractive market segments, while increasing overall speed and cost-competitiveness’ and accelerate its drive for 30% share in the PC market by taking advantage of consolidation and becoming more efficient.

“All changes will be complete ASAP,” Yang notes.

Lenovo expects to incur restructuring costs of around $600 million and additional spending to clear smartphone inventory of around $300 million.

One Identity a Visionary in Magic Quad for PAM
One Identity was recognised in the Gartner Magic Quadrant for Privileged Access Management for completeness of vision and ability to execute.
Accenture 'largest Oracle Cloud integrator in A/NZ'
Accenture has bought out Oracle Software-as-a-Service provider PrimeQ, which now makes Accenture the largest Oracle Cloud systems integrator in Australia and New Zealand.
Telesmart to deliver Cloud Calling for Microsoft Teams
The integration will allow Telesmart’s Cloud Calling for Microsoft Teams to natively enable external voice connectivity from within Teams collaborative workflow environment.
How to keep network infrastructure secure and available
Two OVH executives have weighed in on how network infrastructure and the challenges in that space will be evolving in the coming year.
White box losing out to brands in 100 GE switching market
H3C, Cisco and Huawei have all gained share in the growing competition in the data centre switching market.
Gartner names newcomer Exabeam a leader in SIEM
The vendor landscape for SIEM is evolving, with recent entrants bringing technologies optimised for analytics use cases.
52mil users affected by Google+’s second data breach
Google+ APIs will be shut down within the next 90 days, and the consumer platform will be disabled in April 2019 instead of August 2019 as originally planned.
Genesys PureCloud generates triple-digit revenue growth year on year
In Australia and New Zealand, the company boosted PureCloud revenue by nearly 100%.