Lenovo to lay-off 3,200 non-manufacturing workforce globally

|August 13, 2015 0

MUMBAI, INDIA: The pressure to meet targets and the numbers at play are forcing large multinational corporations to issue pink-slips to unassuming workers!!

The latest to fall prey to this number game who has announced that it will lay-off 3,200 workers from its non-manufacturing segment to save a whopping $1.4 billion.

These 3,200 people equates to about 10 percent of its non-manufacturing headcount, and about 5 percent of the company’s total workforce of 60,000 people.

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Hit by 51 percent drop in net income to $105 million in first quarter, the PC major has decided to eliminate 3,200 jobs in its non-manufacturing workforce around the world.

The elimination will enable Lenovo to cut expenses by about $650 million in the H22015 and about $1.35 billion on an annual basis. It will spend approximately $600 million as restructuring costs and approximately $300 million to clear its smart phone inventory.

The company will now restructure its businesses. As a part of the restructuring, Lenovo is repositioning the Enterprise Business Group (EBG), with more focus on technology, the Internet and innovative approaches.

PCs with 30 percent share will continue to drive a large chunk of Lenovo business. The company will have a streamlined product portfolio with fewer, clearly-differentiated models.

The Mobile Business Group (MBG) will now align smart phone development, production and manufacturing. Lenovo will rely on Motorola to design, develop and manufacture smart phones.

Lenovo said its first fiscal quarter revenue rose 3 percent to $10.7 billion.

Revenue from Lenovo Enterprise Business–including servers, storage, software and services rose 5.5 times to $1.1 billion due to inclusion of System x this year. The ThinkServer brand that targets small and medium sized enterprises increased over 40 percent. The company has set a target to achieve $5 billion in revenue after the close of the System x deal.

Lenovo mobile phone revenue rose 33 percent to $2.1 billion—due to the inclusion of revenue from Motorola. Motorola contributed $1.2 billion to Lenovo’s MBG revenues. Motorola’s contribution to Lenovo’s smart phone shipments dropped 31 percent to 5.9 million units.

Lenovo PC business revenue fell 8 percent to $7.3 billion. Its PC shipment dropped 7.1 percent to 13.5 million. The company targets to achieve 30 percent PC market share in three years.

Lenovo share in smart phone market fell 0.5 points to 4.7 percent, making it the fifth largest smart phone vendor. In the tablet market, Lenovo is at number 3 with 5.6 percent, growing shipments 3.8 percent to 2.5 million units.

Yuanqing Yang, Chairman and CEO, Lenovo, said, “We will 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.”

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