Lenovo, hit by 51 percent drop in net income to $105 million in first quarter, will eliminate 3,200 jobs in its non-manufacturing workforce around the world.
The strategy of Lenovo is to cut expenses by about $650 million in the second half of this year and about $1.35 billion on an annual basis. The Chinese company will spend approximately $600 million as restructuring costs approximately $300 million to clear smartphone inventory.
Earlier, Microsoft announced job cuts – mainly in the Nokia phone business it acquired earlier.
Yuanqing Yang, chairman and CEO of Lenovo, said: “We will integrate elements of the acquisitions with our legacy businesses in Mobile and Enterprise, while building the right business model and cost structure. We will reduce costs in our PC business and increase efficiency in order to leverage industry consolidation increase share and improve profitability.”
3,200 people equates to about 10 percent of non-manufacturing headcount and about 5 percent of our total population of around 60,000 people.
Lenovo said its first fiscal quarter revenue rose 3 percent to $10.7 billion.
Action plan of Lenovo
# Restructuring the Mobile Business Group (MBG) to align smartphone development, production and manufacturing
# There will be a streamlined product portfolio, with fewer, more clearly-differentiated models
# Lenovo to rely on Motorola to design, develop and manufacture smartphone products
# Repositioning the Enterprise Business Group
# Accelerating the drive for 30 percent share in PCs by taking advantage of consolidation
# Lenovo will leverage technology, the internet and innovative approaches
Lenovo PC business revenue fell 8 percent to $7.3 billion. Its PC shipment dropped 7.1 percent to 13.5 million. Lenovo targets to achieve 30 percent PC market share in three years.
Lenovo mobile phone revenue rose 33 percent to $2.1 billion — due to the inclusion of revenue from Motorola. Motorola contributed $1.2 billion to Lenovo’s MBG revenues. Motorola’s contribution to Lenovo’s smartphone shipments dropped 31 percent to 5.9 million units.
Lenovo share in smartphone market fell 0.5 points to 4.7 percent, making it the fifth largest smartphone vendor.
In the tablet market, Lenovo has #3 position with 5.6 percent, growing shipments 3.8 percent to 2.5 million units.
Revenue from Lenovo Enterprise Business – including servers, storage, software and services rose 5.5 times to $1.1 billion due to inclusion of System x this year. The ThinkServer brand that targets small and medium sized enterprises increased over 40 percent. Lenovo aims to achieve $5 billion in revenue after the close of the System x deal.