Lenovo Posts Revenue Below Estimates, Announces Job Cuts

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Lenovo Posts Revenue Below Estimates, Announces Job Cuts
Lenovo Group Ltd missed quarterly revenue expectations on Thursday and said it plans to lay off about 10 percent of its global non-manufacturing workforce, after posting a steep sales decline in its mobile division.

The world's No. 1 PC maker said it plans to cut about 3,200 non-manufacturing positions to save $650 million (roughly Rs. 4,218 crores) in the second half of 2015 and about $1.35 billion (roughly Rs. 8,762 crores) on an annual basis, reflecting intense competition among global smartphone makers.

Chief executive Yuanqing Yang said Lenovo would also restructure its lagging smartphone business at a one-time cost of $600 million (roughly Rs. 3,894 crores), and was facing its "toughest market environment in recent years".

Lenovo, which last year spent $2.91 billion (roughly Rs. 18,889 crores) to buy handset brand Motorola from Google Inc in a bid to solidify its position in smartphones, pointed to "intensifying competition and long product development lifecycles" in the business.

Its mobile division recorded a pre-tax loss of $292 million (roughly Rs. 1,895 crores) in the three months to end June, while Motorola's shipments stood at 5.9 million units, a 31 percent decline from a year prior.

Overall, Lenovo's quarterly revenue rose 3 percent to $10.7 billion (roughly Rs. 69,446 crores) but missed analyst expectations for $11.29 billion (roughly Rs. 73,275 crores), according to analysts polled by Thomson Reuters SmartEstimates.

The Beijing-based company's net profit plummeted 51 percent year-on-year to $105 million (roughly Rs. 681 crores), but was still ahead of a 59 percent drop expected by analysts.

© Thomson Reuters 2015

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