Computer giant Lenovo to axe 2,500 jobs
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Chinese computer giant Lenovo announced on Thursday it would cut about 2,500 jobs, roughly 11 percent of its worldwide workforce, after suffering losses due to the global economic crisis.
AFP - Chinese computer giant Lenovo announced Thursday it would cut about 2,500 jobs, roughly 11 percent of its worldwide workforce, after suffering losses due to the global economic crisis.
The company said in a statement to the Hong Kong Stock Exchange that the "resource redeployment plan" would help save 300 million US dollars in the financial year ending March 31, 2010.
"This plan, when fully implemented, is likely to have the effect of... reducing the number of the group's worldwide employees by approximately 2,500, representing approximately 11 percent of the group's total workforce," it said.
Lenovo, the world's fourth-biggest personal computer maker, said preliminary estimates showed it would make a loss in the final three months of 2008.
"The board believes that such potential loss is incurred mainly due to the unprecedented global economic challenges facing the world resulting in a reducing demand of personal computer and related products," the statement said.
It said that its gross profit had decreased significantly due to its relatively high proportion of sales in the commercial segment, where sales had dried up.
The company's shares price plunged 17.4 percent to 2.13 Hong Kong dollars (0.28 US) early Thursday, after trading in its stock was suspended Wednesday pending release of the profit warning.
Ample Finance Group's Alex Wong forecast a bleak outlook for Lenovo and predicted that the company would underperform in 2009. "This is one stock I won't buy," he told Dow Jones Newswires.
Hong Kong-listed Lenovo, which came to worldwide prominence when it bought IBM's personal computer unit in 2005, said in November last year that its net profit for the three months ending September 30 slumped 78 percent from a year earlier to 23.4 million dollars.
The drop in the third quarter followed the company's report of a surge of more than 200 percent in the 2007-8 financial year, citing strong growth in sales across the world. It also reported double-digit growth in sales in all its markets outside the United States in May last year.
The company tried in 2007 to buy European personal computer maker Packard Bell, but was thwarted by a stronger bid by Taiwanese rival Acer.
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