Rough quarter
Lenovo said it's planning to reduce its workforce by around 5 percent, which works out to 3,200 job cuts. It's a cost cutting measure that Lenovo anticipates will reduce expenses by about $650 million in the second half of this year, and $1.35 billion annually.
News of the staff reduction came as Lenovo reported financial results for its first fiscal quarter ended June 30, 2015. Quarterly revenue came to $10.7 billion, an impressive figure on its own, but down three percent year-over-year. More troubling for Lenovo is that its net income fell 51 percent year-over-year to $105 million.
Lenovo blamed the disappointing figures on "significant declines in the global PC and tablet markets," along with slowed growth and increasing competition, particularly in China, in its smartphone business.
Looking to expand its portfolio and become a bigger player in mobile, Lenovo acquired Motorola from Google for $2.91 billion less than a year ago. That gamble hasn't paid off just yet, and even worse, Lenovo said it plans to write off $300 million in unsold smartphone devices, plus spend $600 restructuring its mobile business.
As for PC sales, Lenovo is still the biggest player around in terms of shipments and market share, having now been in the top spot for nine consecutive quarters. This is despite facing "perhaps the toughest market environment in recent years."
Lenovo collected $7.3 billion in quarterly sales from its PC Group, which includes PCs and Windows tablets. That's an 8 percent decline annually, though that's a reflection of the market, not Lenovo's ability to sell computers -- the OEM reached a record high 20.6 percent global market share on 13.5 million PC sales during the quarter, and widened its lead over Hewlett-Packard in the process.
"We will reduce costs in our PC business and increase efficiency in order to leverage industry consolidation increase share and improve profitability. We will come through these efforts as a faster, stronger and better aligned global company," said Yuanqing Yang, Chairman and CEO of Lenovo.
Even though Lenovo still leads the PC market, it has to be careful not to scare off customers. Fresh off the Superfish scandal, in which it was found that pre-loaded software on some Lenovo systems posed a security threat, it was recently discovered that Lenovo was using a BIOS firmware feature to download its software onto PCs even if a user wipes his/her storage device and performs a clean installation of Windows.
Follow Paul on Google+, Twitter, and Facebook
From maximumpc
from http://bit.ly/1L8Lr77
