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Liu returns to Lenovo after firm's huge loss
By Zhu Shenshen |
February 6, 2009, Friday
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Print Edition
Print Edition
LIU Chuanzhi, co-founder of Lenovo and a veteran in the Chinese IT industry, returned to the company as non-executive chairman after the personal computer vendor yesterday posted a bigger-than-expected loss in the October-to-December period.
Lenovo Group Ltd, the fourth-biggest PC maker, attributed the loss to the impact from the global financial crisis, which forced its corporate clients to cut IT spending.
In the quarter, Lenovo posted a US$96.7-million loss, the biggest in at least three years, against analyst estimates of a US$58-million loss. The company earned US$172 million in the same period a year ago.
Revenue came in at US$3.59 billion, a 20-percent drop from a year ago.
The challenge for Lenovo is to switch its core business from corporate PCs to cheap consumer-oriented PCs, analysts said. They forecast Lenovo would continue to post a loss in the following quarter.
Hong Kong-listed Lenovo's share price dropped 2.67 percent to close at HK$1.46 (18 US cents) yesterday compared with a 1.38-percent jump in the key Hang Seng Index.
"There's no room for Lenovo to retreat, and it has to do something like tapping its domestic advantage and grabbing a bigger share in overseas markets," said Ye Lei, an analyst at Gartner Inc, a United States-based IT consulting firm.
Liu's return to the company he founded in Beijing in 1984 was part of a management reshuffle which saw former chief executive William Amelio stepping down and replaced by Yang Yuanqing, the former chairman. Liu replaced Yang.
Liu said Lenovo aims to grow in emerging markets, including China, Russia and Brazil. The firm also announced recently it would lay off 2,500 people, or 11 percent of its workforce, by March next year to save about US$300 million. It has also cut executive pay and consolidated its China and Asia-Pacific operations into a single division.
Lenovo, which spent US$1.25 billion to acquire IBM's PC business, had about 7.5 percent share of the global PC market last year when it was overtaken as No. 3 by Acer, according to research firm IDC.
Lenovo Group Ltd, the fourth-biggest PC maker, attributed the loss to the impact from the global financial crisis, which forced its corporate clients to cut IT spending.
In the quarter, Lenovo posted a US$96.7-million loss, the biggest in at least three years, against analyst estimates of a US$58-million loss. The company earned US$172 million in the same period a year ago.
Revenue came in at US$3.59 billion, a 20-percent drop from a year ago.
The challenge for Lenovo is to switch its core business from corporate PCs to cheap consumer-oriented PCs, analysts said. They forecast Lenovo would continue to post a loss in the following quarter.
Hong Kong-listed Lenovo's share price dropped 2.67 percent to close at HK$1.46 (18 US cents) yesterday compared with a 1.38-percent jump in the key Hang Seng Index.
"There's no room for Lenovo to retreat, and it has to do something like tapping its domestic advantage and grabbing a bigger share in overseas markets," said Ye Lei, an analyst at Gartner Inc, a United States-based IT consulting firm.
Liu's return to the company he founded in Beijing in 1984 was part of a management reshuffle which saw former chief executive William Amelio stepping down and replaced by Yang Yuanqing, the former chairman. Liu replaced Yang.
Liu said Lenovo aims to grow in emerging markets, including China, Russia and Brazil. The firm also announced recently it would lay off 2,500 people, or 11 percent of its workforce, by March next year to save about US$300 million. It has also cut executive pay and consolidated its China and Asia-Pacific operations into a single division.
Lenovo, which spent US$1.25 billion to acquire IBM's PC business, had about 7.5 percent share of the global PC market last year when it was overtaken as No. 3 by Acer, according to research firm IDC.
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