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August 13, 2015

Lenovo to cut 3,200 jobs as it is hit by mobile losses and sliding PC sales

The company saw declines in the worldwide PC and tablet markets.

By CBR Staff Writer

Lenovo said it will cut about 3,200 jobs in its non-manufacturing workforce globally to increase efficiency after a challenging first quarter.

Net income declined 51% year-over-year to $105m. Revenue for the quarter increased 3% to $10.72bn from $10.34bn last year.

The company experienced severe challenges in its main markets, particularly in the form of large declines in the worldwide PC and tablet markets as well as increased smartphone competition in China.

Despite the tough environment, Lenovo’s PC business reached record worldwide share of 20.6% it said.

Lenovo’s quarterly sales were $7.3bn in the PC Group, which includes PCs and Windows tablets. Its mobile division recorded a pre-tax loss of $292m in Q1, while Motorola’s shipments stood at 5.9 million units, a 31% drop from a year earlier.

Lenovo said it is restructuring the mobile business group and will now depend on Motorola in designing, developing and manufacturing smartphone products.

The company’s measures are intended at reducing expenses by $650m in the second half of 2015 and around $1.35bn annually.

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Lenovo chairman and CEO Yuanqing Yang said: "Last quarter, we faced perhaps the toughest market environment in recent years, but we still achieved solid results. Our PC business remained number 1 for the 9th straight quarter.

"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."

The company said it will reduce costs in its PC business and further integrate elements of the acquisitions with its legacy businesses in mobile and enterprise segments.

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