China’s Lenovo Group Ltd says it will lay off 10 per cent of white-collar staff (about 3,200 non-manufacturing jobs) after sales of Motorola handsets fell by a third.
Beijing-based Lenovo said on Thursday that the restructuring would yield savings of about 1.35 billion dollars on an annual basis.
The Chief Executive, Yang Yuanqing, said the difficulty in selling handsets combined with a continuously shrinking global market for personal computers meant the firm was facing its “toughest market environment in recent years.’’
“I still believe mobile is a new business we must win.
“I still believe this acquisition (Motorola) was the right decision…except Apple and Samsung; there is no third strong (global) player and I believe that will be Lenovo.”
Yang said Lenovo’s ambition to rival Apple Inc and Samsung Electronics Co in smart phones remained undimmed.
Shares in the world’s biggest maker of PCs slid nearly 9 per cent on Thursday after it said its quarterly net profit was halved as its mobile division lost nearly 300 million dollars.
Lenovo which bought Motorola from Google Inc in 2014 for 2.91 billion dollars to shore up the firm shipped 5.9 million handsets in the quarter, a 31 per cent decline from 2014.
The slide raised doubts over the personal computer giant’s bet that a money-losing brand it bought for nearly 3 billion dollars will help it become a global smart phone leader.
Yang cited poor sales in Brazil and China as the cause of the slide.
He said Lenovo would prioritise marketing smart phones outside its home turf where market saturation and price wars had made firms weak.