China's Lenovo Downsizes Global Workforce

The global financial crisis has hit Chinese PC maker Lenovo and it has announced that it will cut approximately 11% of its total global workforce, while the company expects to report a loss for the fiscal quarter that ended December 31, 2008.

"Although the integration of the IBM PC business for the past three years was a success, our last quarter's performance did not meet our expectations," said Yang Yuanqing, Lenovo's chairman. "We are taking these actions now to ensure that in an uncertain economy, our business operates as efficiently and effectively as possible, and continues to grow in the future."

From these restructuring actions, the company expects to realize savings of approximately USD300 million in the 2009/2010 fiscal year that ends March 31, 2010. The company anticipates taking a pre-tax restructuring charge of approximately USD150 million, most of which will be taken in the fourth fiscal quarter ending March 31, 2009. Approximately USD24 million of the restructuring charges were booked in Lenovo's second fiscal quarter ending September 30, 2008.

The company expects to reduce the number of its employees worldwide by 2,500 during the first quarter of 2009, and this includes management and executive positions. The company is also reducing expenses in support and staff functions, such as finance, human resources, and marketing.

Lenovo says as part of these cost-saving actions that it is relocating its call center operations from Toronto in Canada to Morrisville, North Carolina, the company's main site in North America.

William Amelio, president and CEO of Lenovo Group, said it was hard for the company to make the decision to reduce staff and the company will show its care and respect to staff being affected, but the company is obliged to do this because the current economic environment into account. He added that in long run, this would enable the company to provide better service and products to its customers.

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