Date
23 March 2017
Lenovo CEO Yang Yuanqing cites the need to reduce costs amid consolidation in the industry. Photo: AFP
Lenovo CEO Yang Yuanqing cites the need to reduce costs amid consolidation in the industry. Photo: AFP

Lenovo to cut jobs as PC market continues to contract

Lenovo Group Ltd., the world’s largest personal-computer maker by shipments, said it will cut 10 percent of its non-manufacturing jobs after net profit fell 50.9 percent in the three months to June.

The company said it would reduce its non-manufacturing workforce by 3,200 as part of a US$650 million cost-cutting effort in the second half of the fiscal year, the Wall Street Journal reported.

“We will reduce costs in our PC business and increase efficiency in order to leverage industry consolidation, increase share and improve profitability,” Lenovo chief executive Yang Yuanqing said in a statement.

Lenovo is grappling this year with the integration of two major acquisitions—smartphone maker Motorola Mobility and IBM ’s x86 server unit—even as the global PC market continues to contract and China’s smartphone market grows saturated, the newspaper said.

The company reported a net profit of US$105 million for its fiscal first quarter, down from US$214 million a year earlier. Analysts had expected net profit of US$86.7 million.

Revenue rose 2.9 percent to US$10.7 billion.

Analysts have been bearish about the near-term performance outlook for Lenovo amid the challenging market conditions.

The global PC market contracted 11.8 percent in the second quarter, while the Chinese smartphone market has become saturated, shrinking in the first quarter for the first time in six years, according to market research firm IDC.

Lenovo was the fifth-largest smartphone maker globally by shipments in the second quarter with 4.5 percent market share, falling from No. 3 in the first quarter, the Journal said, citing data from Counterpoint Research. 

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