Lenovo Quarterly Revenue Misses Expectations, Announces Cuts

Lenovo Group Ltd missed quarterly revenue expectations and said it plans to lay off about 10% of its global non-manufacturing Lenovoworkforce, after posting a steep sales decline in its mobile division.

The world’s No. 1 PC maker said it plans to cut about 3,200 non-manufacturing positions to save $650 million in the second half of 2015 and about $1.35 billion on an annual basis, reflecting intense competition among global smartphone makers.

Chief executive Yuanqing Yang said Lenovo would also restructure its lagging smartphone business at a one-time cost of $600 million, and was facing its “toughest market environment in recent years”.

Lenovo, which last year spent $2.91 billion to buy handset brand Motorola from Google Inc in a bid to solidify its position in smartphones, pointed to “intensifying competition and long product development lifecycles” in the business.

Its mobile division recorded a pre-tax loss of $292 million in the three months to end June, while Motorola’s shipments stood at 5.9 million units, a 31% decline from a year prior.

Overall, Lenovo’s quarterly revenue rose 3% to $10.7 billion but missed analyst expectations for $11.29 billion, according to analysts polled by Thomson Reuters SmartEstimates.

The Beijing-based company’s net profit plummeted 51% year-on-year to $105 million, but was still ahead of a 59% drop expected by analysts.

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