Lenovo to lay off over 3000 employees

Lenovo said on Thursday “severe challenges” in its main markets have forced it to make job cuts worldwide. The company had previously said it expected to reach $5 billion of annual sales within a year.

“In the smartphone business, our strategic shift from China to the rest of world has paid off. And our combined enterprise business achieved operational PTI for the third consecutive quarter”, said Yuanqing Yang, Chairman and CEO of Lenovo.

The move isn’t a huge surprise: Lenovo is trying to streamline its operations in order to improve profitability, and the company already had a smartphone division before acquiring Motorola. “We will maintain a substantial employee base there, as well as our labs and design facilities”, Motorola told the news outlet, noting that the cuts will occur “across all functions, affecting all departments”. It’s unclear what this means immediately for consumers, but we suspect there won’t be many outward facing changes. Worse, its actual net income took a steep dive to $105 million, a 50 percent decline from the same period past year. Overall, Lenovo’s quarterly revenue rose 3 percent to $10.7 billion but missed analyst expectations for $11.29 billion, according to analysts polled by Thomson Reuters SmartEstimates. “When we emerge from this effort, we will be a faster, stronger, better integrated and aligned global company”.

Lenovo shares traded in Hong Kong were down almost seven percent in morning trade at HK$7.88 (US$1.02). This was despite ringing up revenue of $2.1 billion. Motorola Solutions is under separate ownership and not part of the announced closure.

Lenovo’s mobile division reported a pre-tax loss of $292 million in the three months to end June, while the company shipped 5.9 million units, a 31-per cent decline from a year prior.