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 Motorolafrom 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.