Lenovo Trims Five Percent of Workforce

Lenovo announced an ambitious restructuring plan the company said could save as much as $250 million on an annual basis when its completed over the next six to twelve months.

The China-based maker of the ThinkPad and ThinkCentre notebook and PC line formerly owned by IBM, said it will plans to lay off approximately 1,000 full-time positions or about 5 percent of its workforce in the Americas, Asia/Pacific and other regions including Europe. Lenovo

Lenovo said anticipated a restructuring charge relating to the plan of approximately US$100 million, most of which will be taken in its fourth fiscal quarter which ends March 31, 2006.

The restructuring will allow Lenovo to “pursue growth aggressively in both the relationship and transaction customer segments and delivering a cost structure that better reflects the realities of today’s highly competitive, global PC industry,” according to a statement by Lenovo CEO William Amelio.

In addition to the layoffs, Lenovo plans to integrate its global sales organization and back-office support into what it said will be a highly responsive, and efficient customer-service unit.

Lenovo also is moving its global supply chain closer to manufacturing and suppliers; centralizing its desktop group in China for increased efficiency; moving corporate functions currently located in Purchase, New York, to Raleigh, North Carolina, all of which it says will save time and money and move executives closer to operations.

“These steps position Lenovo as a more effective global competitor while supporting our commitment to lead in innovation and customer satisfaction,”
Mr. Amelio said.

“Our global strategy will remain focused on developing high-growth markets such as SMB and emerging countries. In the current stage of the strategy execution, substantial strides forward have been made in all key areas — innovation, customer satisfaction and operational excellence — notably through our recent introduction of the Lenovo 3000 products worldwide and our terrific performance as the computer hardware provider to the 2006 Winter Olympics.”

Lenovo said it anticipated a restructuring charge relating to the plan of approximately US$100 million, most of which will be taken in its fourth fiscal quarter which ends March 31, 2006.