Lenovo (LNVGY) has announced plans to eliminate 1,400 jobs, or about 5% of the company's global workforce.
Of this number, approximately 750 positions will be transitioned into emerging markets closer to Lenovo's suppliers and manufacturing operations. The net effect is a global workforce reduction of about 650 positions, with most of these changes expected to be completed within the year.
"To win in the PC industry, our path is very clear," said William J. Amelio, Lenovo's president and chief executive officer. "We must deliver the world's best-engineered PCs, offer our customers an unrivaled ownership experience, and grow faster and more profitably than the rest of the industry. This means we must make our organization more efficient by reducing expenses."
The company expects to realize savings of approximately US$100 million in its 2007-08 fiscal year, the majority of which will be reinvested back into the business to support the company's strategic initiatives. The company anticipates taking a pre-tax restructuring charge of approximately US$50 to $60 million, most of which will be taken in the first fiscal quarter, which ends June 30, 2007.
These actions are the result of a thorough analysis of both Lenovo's global operations and current PC market conditions. They will streamline processes and consolidate Lenovo's expertise across the globe, enabling the company to meet customer needs more efficiently and operate more competitively. The key components of Lenovo's action plan are as follows:
In Europe, Lenovo will immediately launch the process of consultation with workforce representatives, as appropriate, regarding the plan's intended efficiency gains and cost structure reductions.
"While these actions are difficult, we believe the 'tipping point' is within reach," concluded Amelio. "If we can combine optimal cost competitiveness and efficient delivery capabilities with innovative, best-engineered products, we can generate more profitable growth, gain market share, and make further reinvestments into the business, fueling more growth. We are confident that we are doing the right things to make Lenovo an even stronger, more competitive player in the global PC market."