Oh, Lenovo! 1,000 staff strapped to redundancy cannon

US and China in the firing line

Lenovo is laying off a little more than 1,000 employees with the majority of heads set to roll in the US and China.

The “worldwide resource action” will impact “approximately two per cent of our approximately 52,000 employees globally,” a spokesman confirmed to The Register in a statement.

“While we are making good progress by executing our three-wave strategy and strongly believe that we are on the right path to profitable growth, we are taking this step now to ensure that we are as competitive and as cost-efficient as we can be, particularly with our growth continuing to build momentum in the market place,” he added.

The three-pronged strategy is to protect the legacy PC business, rework the server and smartphone business so it fires on all cylinders - easier said than done - and develop new tech including cloudy stuff.

The spokesman added: “Lenovo will continue to make adjustments in all areas of the business as part of our continued effort to manage costs, drive efficiency and support ongoing improvement in our overall financial performance.

“While doing so, we will continue to invest in our growth engines, including our mobile and data centre businesses, and non-hardware businesses such as artificial intelligence and Big Data,” he added.

The company rep didn’t reveal where the job-cutting would come from in terms of the divisions, but he told us the “majority” would be in the US and China.

Lenovo, which lost its crown as the IT industry’s biggest seller of computers to HP Inc in the second and third calendar quarters of 2017, has struggled to integrate the buys of IBM’s x86 division and Motorola.

The strain that these struggling and loss-making purchases placed on the business can be seen in the results in recent years with sales falling and profits sliding in 2016 and 2017 financial years.

In fiscal ’17 ended 31 March, Lenovo’s sales dipped four per cent to $43.03b. It chopped more than $1.2bn in expenses during the year to $5.43bn which led to a pre-tax profit of $490m versus a pre-tax loss of $277m in the prior twelve months.

In the first quarter ended 30 June, sales dipped to $10.012bn from $10.056bn a year earlier; operating expenses went up 6 per cent to $1.37bn; and pre-tax loss was $69m.

The latest job cuts at Lenovo follow actions taken in 2016 during May and September. ®

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