Old guard storms boardroom at ailing Lenovo

PC vendor sees shipments slide faster than industry

Lenovo's old guard Chinese management parachuted back into the boardroom yesterday as it released third quarter numbers that showed its shipments dropping faster than the industry average in every market except China.

Sales at the Beijing-based PC vendor slipped 20.1 per cent to $3.6bn in the quarter ending December 31, while last year's $172m net profit evaporated, leaving a $97m loss this time round.

The economic downturn has hit all technology vendors to a greater or lesser degree. However, Lenovo's shipments appears to have taken a bigger hit than the industry as a whole.

Sales at the vendor's Chinese arm were $1.6bn, with shipments dropping one per cent compared to an industry average of seven per cent in the country.

However, the Americas arm, which accounts for 25 per cent of sales,saw shipments down six per cent compared to an industry average of three per cent, while EMEA - accounting for a fifth of revenues - saw shipments down two per cent, compared to the industry's one per cent rise. Asia Pac, excluding China, saw shipments down 23 per cent, compared to a four per cent average decline. Lenovo noted a particular drop in Indian shipments.

Lenovo has responded by recalling founder and board member Liu Chuanzhi, who retakes the chairman's spot. Incumbent chairman Yang Yuanqing has returned to the CEO's role.

The ensuing exec domino effect sees William Amelio leave, having come to the end of his three-year contract, the company said. Amelio joined the firm in 2005, having done stints at Dell, NCR and IBM.

Meanwhile, operations SVP Rory Read takes over the newly created role of president and COO.

The return of the old guard heralds a renewed focus on the vendor's home market.

“Lenovo has grown successfully on the international stage, but at this important time, we want to pay particular attention to our China business as it represents the foundation of our global business and growth strategy,” said Liu Chuanzhi.

The switch in strategy provides much food for thought. Does it mean the company is battening down the hatches amidst increased fears of protectionism? Or is it giving up on non-China markets as IT budgets there evaporate? Worryingly, both assumptions could be correct. ®

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