Menu
Struggling Lenovo to cut 3200 jobs, streamline handset business

Struggling Lenovo to cut 3200 jobs, streamline handset business

Lenovo reported weak second quarter earnings

A Lenovo store in Beijing.

A Lenovo store in Beijing.

Lenovo is laying off 3200 employees and trimming down its smartphone portfolio in response to a slowdown in its PC and handset sales.

The Chinese company faced a particularly tough market environment during the second quarter, its CEO, Yang Yuangqing, said. Demand is down for PCs and tablets, and competition in China's smartphone market is cutting into sales.

The company reported second quarter earnings that failed to meet its expectations. Net profit declined 51 per cent year over year to reach $US105 million. Revenue increased by only 3 per cent from a year ago, to reach $US10.7 billion.

In response, Lenovo has announced cost-cutting measures that will reduce its employee strength of 60,000 by 5 per cent. It is also restructuring its mobile business group, to pave the way for a simpler product portfolio with fewer smartphone models.

Thursday's lay offs will help reduce Lenovo's expenses by about $US1.35 billion on an annual basis. The Chinese company will also pay a price to streamline its handset business, and will incur $US600 million in restructuring costs.

Lenovo has led as the world's largest PC maker, but it has also been expanding into smartphones and enterprise hardware to increase revenue. This led the company to acquire smartphone maker Motorola Mobility and IBM's x86 server business last year.

However, it is apparently taking time for Lenovo to integrate the acquisitions into its overall business. Motorola, for instance, is still reporting a loss and cutting into the company's earnings.

Lenovo said the job cuts and restructuring will be completed as soon as possible. "We do not make these moves lightly," Lenovo's CEO said in a letter to employees that the company released. "But we must ensure our long-term success."


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags smartphonesbusiness issuesfinancial resultsLenovoconsumer electronicslayoffs

Featured

Slideshows

Meet the leading female front runners of the Kiwi channel

Meet the leading female front runners of the Kiwi channel

Reseller News honoured the leading female front runners of the New Zealand channel at the 2018 Women in ICT Awards (WIICTA) in Auckland. The awards honoured standout individuals across seven categories, spanning Entrepreneur; Innovation; Rising Star; Shining Star; Community; Technical and Achievement.

Meet the leading female front runners of the Kiwi channel
Meet the top performing customer-centric Microsoft channel partners

Meet the top performing customer-centric Microsoft channel partners

Microsoft honoured leading partners across the channel following a year of customer innovation and market growth in New Zealand. The 2018 Microsoft Partner Awards recognised excellence within the context of the end-user, spanning a host of emerging and established providers.

Meet the top performing customer-centric Microsoft channel partners
Reseller News launches new-look Awards at 2018 Judges’ Lunch

Reseller News launches new-look Awards at 2018 Judges’ Lunch

Introducing the Reseller News Innovation Awards, launched to the channel at the 2018 Judges’ Lunch in Auckland. With more than 70 judges now part of the voting panel, the new-look awards will reflect the changing dynamics of the channel, recognising excellence across customer value and innovation - spanning start-ups, partners, distributors and vendors.

Reseller News launches new-look Awards at 2018 Judges’ Lunch
Show Comments