Boston: No. 3 personal computer maker Lenovo Group Ltd. said on 19 April it will lay off 1,400 workers and move jobs to emerging markets to better compete with faster growing rivals such as Hewlett-Packard Co. and Acer Inc.
Lenovo, which leapt onto the world stage in 2005 when it bought IBM’s loss-making PC arm for $1.25 billion, said it would cut a net 650 jobs throughout the world.
An additional 750 positions will be moved to China, India, Brazil and Slovakia, countries with lower labour costs that are close to Lenovo’s suppliers and manufacturing operations.
China’s biggest maker of personal computers said the plan would affect 1,400 workers including contractors, or roughly 5% of its workforce.
Lenovo said it is making the changes to cut expenses, bringing its cost structure in line with those of rivals in an industry known for aggressive pricing.
While the company’s personal computer sales grew 17% in the first quarter from a year ago, that was slower than some competitors.
Market researcher IDC on Wednesday reported Taiwan’s Acer saw first-quarter PC sales surge 41% from a year ago, placing it in a dead heat with Lenovo as the world’s No. 3 maker of personal computers. Both companies sold about four million PCs during the first quarter.
Hewlett-Packard’s sales rose 28% to 11.2 million machines while Dell Inc.’s sales fell 7% to 9 million.
“There is no doubt we have made strong progress in the past year,” Lenovo Chief Executive William Amelio said in a statement. “But it’s clear we need to further accelerate that progress to be as profitable and cost efficient as the rest of the industry.”
The company expects to take a pretax restructuring charge of about $50 million to $60 million, mostly in the first quarter, and sees savings of about $100 million in the 2007-08 fiscal year, which began on 1 April, Lenovo said.
Lenovo currently has about 24,500 employees, including 1,700 in Raleigh, North Carolina, which is the worldwide executive headquarters of the Chinese company.
Company spokesman Ray Gorman said about 350 workers in Raleigh will lose their jobs. He declined to say how the job cuts would be broken down across the rest of the company’s operations around the world.