Decline in quarterly profits causes Lenovo to lay off 3,200 staff
By Tim Schiesser on August 13, 2015, 9:30 AM
Declines in the global PC market and increased competition in the smartphone space are making life tough for Lenovo. The company has reported a significant drop in net income for the first quarter of their fiscal year, and as a result, they're looking to streamline their workforce in the near future.
For Lenovo's first fiscal quarter ending June 30, 2015, the company reported revenue of $10.7 billion, which is a three percent increase on revenues reported in the same quarter last year. Unfortunately the news isn't as good for income, which decreased by a whopping 80 percent year-on-year to $52 million, while net income also declined by 51 percent to $105 million.
To return to growth, Lenovo is undertaking some "realignment actions", the most significant of which is a reduction of the company's workforce. Lenovo says 3,200 people will be laid off in the process, which is 10% of the company's non-manufacturing headcount, and 5% of staff overall.
This streamlining and restructuring will cost the company $600 million in the short term, with the aim to reduce expenses by $650 million in the second half of the year, and by $1.35 billion each year.
The reduction in headcount isn't the only restructuring effort Lenovo is undertaking. The company will rejig their Mobile Business Group to "better leverage the complementary strengths of Lenovo and Motorola". This includes reducing the number of smartphone models produced by the company to streamline their product portfolio.
The company is also hoping to achieve a 30 percent share in the PC market by becoming more efficient and by "better taking advantage of consolidation". Lenovo currently holds a worldwide market share of 20.6 percent, with a company-record-high share of 13 percent in the United States.
