Lenovo to cut 3,200 jobs as profits halve
Chinese computer and smartphone manufacturer to axe 3,200 jobs in effort to cut costs
PC manufacturer Lenovo is set to axe five per cent of its workforce as the firm looks to reduce costs after suffering a 50 per cent drop in profits.
The Chinese PC, laptop and smartphone manufacturer saw its first quarter profit drop by 51 per cent to $105m (£67m), while revenue was well below forecasts at $10.7bn.
The drop in profit comes after Lenovo paid Google $2.3bn for Motorola in January last year. Lenovo currently has a 4.6 per cent share of the global smartphone market, despite its market dominance in the PC sector.
Nonetheless, Lenovo has been hit hard by slowing demand for computers and laptops in its native China - mirroring a global decline in PC sales - in what Yuanqing Yang, chairman and CEO of Lenovo, called the "toughest market environment for years".
As a result, the world's largest PC manufacturer is set to cut 3,200 jobs in an effort to cut costs in a programme that aims to save $650m during the remainder of 2015 alone.
"To build long-term, sustainable growth, we must take proactive and decisive actions in every part of the businesses," said Yang, who outlined some of Lenovo's plans.
"We will further integrate elements of the acquisitions with our legacy businesses in Mobile and Enterprise, while building the right business model and cost structure. We will reduce costs in our PC business and increase efficiency in order to leverage industry consolidation increase share and improve profitability.
"We will come through these efforts as a faster, stronger and better aligned global company," Yang said.
Lenovo said it plans to cut about 3,200 jobs from its manufacturing operation, a figure that represents about five per cent of the entire workforce. The company estimates that it will save $1.35bn a year as a result of the job cuts.