Lenovo is the biggest manufacturer of PCs and the fifth for smartphones. But it seems that lately, Lenovo has been on the down-low. The firm has announced that 3,200 of its staff will be laid off in an attempt to improve its finances, after profits plunged by half in the last quarter.
A cut in its work force is seen as a way to reduce its wage bill by around $1.35 billion per year, and its overall headcount by 5 percent. The 3,200 employees also represent 10 percent of its non-manufacturing people. The move is a part of the cost-cutting programme expected to give the firm a $650 million savings for the rest of 2015.
Reports of its revenue revealed that "significant declines" were noted in the worldwide demand for PCs and tablets. This is with an increase in completion in China's smartphone, but a decline in its market, plus Latin America's "large currency fluctuations." These are said to be the causes that have pulled Lenovo and its subsidiary, Motorola, down.
The Chief Executive and Chairman of this Chinese company, Yuanqing Yang, said, "Last quarter, we faced perhaps the toughest market environment in recent years." He added that, "To build long term, sustainable growth, we must take proactive and decisive actions in every part of the businesses."
According to the company's officials, the job cuts and restructuring will be done as soon as possible. In a letter released to the employees, the CEO stated: "We do not make these moves lightly. But we must ensure our long-term success."
Apart from the layoff, the company will spend a hefty $600 million for the restructuring of its smartphone business, which will hopefully make Lenovo and Motorola "more strategically aligned." Likewise, $300 million will be written off in its unsold smartphone units.
The company bought Motorola from Google last year for $2.9 billion, in a bid to push its position in the mobile market. But then, the brand's contribution to Lenovo's smartphone shipments had suffered by 31 percent from its 5.9 million units sold a year earlier.
The mobile division of Lenovo declared a $292 million pre-tax loss for three months until the end of June.
