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Lenovo to slash 2,500 jobs in first quarter
By Zhu Shenshen |
January 8, 2009, Thursday
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Online Edition
Online Edition
LENOVO Group Ltd will cut about 2,500 jobs or 11 percent of its work force in the first quarter and reduce executive's pay in 2009 in response to the global financial crisis, the company said today.
Lenovo, the world's fourth-biggest personal computer maker, also expected to post a loss in the latest quarter ended on December 31, following a 78 percent decrease in net profit in the previous quarter.
China's biggest personal-computer maker expected to save about US$300 million in the fiscal year ending on March 31 of 2010. The company said it would book a restructuring charge of about US$150 million this fiscal year.
Under the plan, the HK-listed Lenovo will lay off 2,500 people, including a number of senior executives. Executive compensation will be reduced by between 30 and 50 percent, including bonuses and other incentive payments, in the coming year. Lenovo said the majority of layoffs would occur outside China without disclosing further details.
"The actions we are taking today are not easy," Bill Amelio, Lenovo's chief executive, said in a statement. "We believe the steps we are taking today are necessary for Lenovo to compete in today's economy."
Lenovo's shares plunged 21.71 percent to HK$2.02 at 2pm in Hong Kong trading. Trading in the shares was suspended yesterday.
"It's the toughest time for Lenovo after the acquisition and it's necessary for it to do something," said Qu Xiaodong, analyst at Beijing-based consulting firm CCW Research.
Lenovo acquired the PC business of IBM for US$1.25 billion, whose major revenue came from US-based clients.
The tough economy has deterred consumer confidence and spending by enterprises, especially in the United States.
Globally, Lenovo's market share was 7.3 percent at the end of last year, compared with 7.8 percent a year ago, according to Gartner Inc, a US-based IT consulting firm.
Meanwhile, Lenovo's China and Asia Pacific operations, which run as separate businesses, will be consolidated and led by Chen Shaopeng, who runs Lenovo China operations, Shanghai Daily reported yesterday.
The restructuring is designed to let the strong Chinese team to lend its experience to Asia and improve work efficiency, according to Ye Lei, Gartner's PC analyst.
Lenovo China contributes 40 percent to the company's total revenue but it also faces increasing competition from Hewlett-Packard, Dell Inc and Acer Inc, industry insiders said.
Lenovo, the world's fourth-biggest personal computer maker, also expected to post a loss in the latest quarter ended on December 31, following a 78 percent decrease in net profit in the previous quarter.
China's biggest personal-computer maker expected to save about US$300 million in the fiscal year ending on March 31 of 2010. The company said it would book a restructuring charge of about US$150 million this fiscal year.
Under the plan, the HK-listed Lenovo will lay off 2,500 people, including a number of senior executives. Executive compensation will be reduced by between 30 and 50 percent, including bonuses and other incentive payments, in the coming year. Lenovo said the majority of layoffs would occur outside China without disclosing further details.
"The actions we are taking today are not easy," Bill Amelio, Lenovo's chief executive, said in a statement. "We believe the steps we are taking today are necessary for Lenovo to compete in today's economy."
Lenovo's shares plunged 21.71 percent to HK$2.02 at 2pm in Hong Kong trading. Trading in the shares was suspended yesterday.
"It's the toughest time for Lenovo after the acquisition and it's necessary for it to do something," said Qu Xiaodong, analyst at Beijing-based consulting firm CCW Research.
Lenovo acquired the PC business of IBM for US$1.25 billion, whose major revenue came from US-based clients.
The tough economy has deterred consumer confidence and spending by enterprises, especially in the United States.
Globally, Lenovo's market share was 7.3 percent at the end of last year, compared with 7.8 percent a year ago, according to Gartner Inc, a US-based IT consulting firm.
Meanwhile, Lenovo's China and Asia Pacific operations, which run as separate businesses, will be consolidated and led by Chen Shaopeng, who runs Lenovo China operations, Shanghai Daily reported yesterday.
The restructuring is designed to let the strong Chinese team to lend its experience to Asia and improve work efficiency, according to Ye Lei, Gartner's PC analyst.
Lenovo China contributes 40 percent to the company's total revenue but it also faces increasing competition from Hewlett-Packard, Dell Inc and Acer Inc, industry insiders said.
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