Lenovo lays off 1,400
By Suzanne Deffree, News Editor -- EDN, April 19, 2007
Lenovo today announced 1,400 job cuts in an effort to streamline its supply chain and save some $100 million in its current fiscal year, which began on April 1.
The top PC maker in China said the layoffs, which amount to roughly 5 percent of its total workforce, will come from the Americas, Asia/Pacific and EMEA. Approximately 750 positions will be transitioned into emerging markets closer to Lenovo’s suppliers and manufacturing operations, making the net effect is a global workforce reduction about 650 positions, with most of these changes expected to be completed within one to 12 months.
“To win in the PC industry, our path is very clear,” said William J. Amelio, Lenovo’s president and CEO, said in the company’s statement. “We must deliver the world’s best-engineered PCs, offer our customers an unrivaled ownership experience, and grow faster and more profitably than the rest of the industry. This means we must make our organization more efficient by reducing expenses.
“There is no doubt we have made strong progress in the past year, but it’s clear we need to further accelerate that progress to be as profitable and cost efficient as the rest of the industry,” Amelio continued. “Today’s actions are necessary to enable us to reduce expenses and grow our business.”
Lenovo announced plans to buy IBM’s PC business in December 2004 for $1.75 billion, giving the company a stronger global presence and much larger electronics supply chain. Key to Lenono’s plan is a consolidation of that supply chain, which will include integrating software testing into its China operations; further integrating customer support functions; streamlining its sales and marketing organizations; and centralizing teams and aligning multi-national investments and resources. Indeed, in Europe Lenovo said it will immediately launch the process of consultation with workforce representatives.
Lenovo was ranked the fourth largest PC maker by shipments by Gartner and tied for third place in IDC's ranking this week. “While these actions are difficult, we believe the 'tipping point' is within reach,” concluded Amelio. “If we can combine optimal cost competitiveness and efficient delivery capabilities with innovative, best-engineered products, we can generate more profitable growth, gain market share, and make further reinvestments into the business, fueling more growth. We are confident that we are doing the right things to make Lenovo an even stronger, more competitive player in the global PC market.”
On the actions, the company anticipates taking a pre-tax restructuring charge of $50 million to $60 million, most of which will be taken in the first fiscal quarter, which ends June 30.
In related news, Spansion separately announced a restructuring plan this week in an effort to battle harsh ASPs per bit.
