Chinese computer and smart phone company, Lenovo, is set to lay off 3,200 employees due to the disappointing decrease of profits last quarter.
Lenovo said that the cut will reduce five percent of its employees globally and ten percent of its non-manufacturing staff in a move that would reduce its wage bill by an estimated $1.35 billion per year.
The news emerged after Lenovo published its results for the first quarter which saw operating profit down by more than 51 percent year-on-year to reach $105 million.
The company reported a three percent rise in revenue of $10.7 billion on the same period last year, but experts say that the significant decrease in demand for Lenovo computers worldwide before the release of windows 10 and currency fluctuation dragged the firm down.
“Last quarter, we faced perhaps the toughest market environment in recent years. To build long term, sustainable growth; we must take proactive and decisive actions in every part of the businesses. “Said Yuanqing Yang , Lenovo CEO and Chairman in a statement.
The world’s biggest PC-maker, said this move to cut down on staff was part of the plan set up to save money in the remainder of 2015.
In addition to the layoffs, Lenovo will write off $300 million in unsold smartphones, and spend $600 million to restructure its smartphone businesses so that Motorola and Lenovo are more strategically aligned.
Sources in Lenovo Nigeria told BusinessDay that they had no idea about the staff cuts.
“I am just hearing this news for the first time, I have no idea what that decision means but for now, we have not heard anything and it is not affecting us here at Lenovo Nigeria.” a Lenovo staff said.
“Lenovo phones, laptops and tablets sell like hot cakes in Nigeria. I sell about ten or more per day, I wonder why they are recording low sales and decline in profits. Maybe they are referring to sales in China or Europe and other more developed countries were they have higher and more advanced popular technology like apple. In Nigeria, most people go for the cheaper Android phones as long as it gives us the same functions as most of these more advanced smartphones,” Said the Commercial Director at CF Mobile Nigeria, Subomi Sodipo.
In October last year, the company bought Motorola from Google in order to boost its position in the smartphone industry. However this seemed not to be a smart move as reports show that its contribution to the smartphone’s shipment fell 31 percent from a year earlier to 5.9 million units.