Lenovo Cuts 1,400 Jobs - InformationWeek

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Lenovo Cuts 1,400 Jobs

The PC-maker also plans to streamline its sales and marketing organizations, centralize teams, and align multi-national investments and resources.

Chinese computer maker Lenovo said Thursday it would cut 1,400 jobs in order to remain competitive in the fierce PC market.

The cuts, which amounted to 5% of Lenovo's global workforce, were expected to reduce expenses by about $100 million in the 2007-08 fiscal year, which started April 1. The majority of the money would be reinvested back into the business to support strategic initiatives, the company said.

"To win in the PC industry, our path is very clear," William J. Amelio, Lenovo's president and chief executive officer, said in a statement. "We must deliver the world's best-engineered PCs, offer our customers an unrivaled ownership experience, and grow faster and more profitably than the rest of the industry. This means we must make our organization more efficient by reducing expenses."

Lenovo expected to take a pre-tax restructuring charge of from $50 million to $60 million, most of which would be taken in the current quarter ending June 30.

The company said 750 positions would eventually be transitioned into emerging markets closer to Lenovo's suppliers and manufacturing operations. The net effect, therefore, is a workforce reduction of about 650 positions from its global workforce, the company said. Most of the cuts would be completed within one to 12 months.

The latest action stems from a recent analysis of Lenovo's global operations and PC market conditions, the company said. Other moves planned by the company included streamlining the global supply chain by aligning more work closer to the supply base, and integrating software testing in Lenovo's China operations. In addition, the company planned to streamline its sales and marketing organizations, centralize teams, and align multi-national investments and resources.

In the first quarter of this year, Lenovo was ranked the fourth largest PC maker worldwide in terms of shipments, according to Gartner. In the United States, the world's largest market, it failed to reach the top five.

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