Chinese PC manufacturer Lenovo has announced plans to cut approximately 2,500 jobs during the first quarter of 2009 in a bid to counter the global economic downturn and the fall in demand for PCs.
The company said the job cuts will include management and executive positions. It also plans to reduce executive compensation by 30% to 50%, and reduce expenses in support and staff functions including finance, human resources, and marketing. It plans to relocate its call center operations from Toronto to Morrisville, North Carolina.
It is also merging its China and Asia Pacific organizations into a single business unit to reduce operating expenses. Chen Shaopeng, senior vice president and president of Greater China operations, will head the unit.
The company also announced Scott DiValerio, senior vice president and president of Americas, will leave the company, and said the Americas Group will report to Rory Read, senior vice president of operations.
Lenovo said it expects the restructuring to result in cost savings of approximately $300m in the in the year ending March 2010. It expects to incur a pre-tax restructuring charge of approximately $150m, most of which will be taken in the fourth fiscal quarter. It also expects to report a loss for the third quarter 2009.
Lenovo chairman, Yang Yuanqing, said: Although the integration of the IBM PC business for the past three years was a success, our last quarter’s performance did not meet our expectations. We are taking these actions now to ensure that in an uncertain economy, our business operates as efficiently and effectively as possible, and continues to grow in the future.
In November the company reported a 78% decrease in net income to $23m for the second quarter 2009, compared to $105m in the year-ago quarter, on revenue up marginally at $4.32 billion.
