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IT Lenovo Cuts 2,500 Jobs Worldwide
Brandon Hill (Blog) - January 8, 2009 11:42 AM
Print 18 comment(s) - last by Dreifort.. on Jan 12 at 9:49 AM

Lenovo ThinkPad W700ds  (Source: DailyTech/Brandon Hill)
Lenovo shares plunge following losses, job cuts

The downturn in the economy is affecting various industries. The computing industry has been hit relatively hard and a number of tech giants have announced reduced earnings and job cuts.

The latest company to fall victim to the harsh realities of the current economic climate is Lenovo. Lenovo Group Ltd. announced its first loss in 11 quarters which sent its shares down 26 percent according to Bloomberg News. The company is doing everything in its power to reduce costs and that means that jobs cuts are on the way.

The company announced that it will cut 2,500 employees worldwide during the first quarter of 2009 -- this represents 11% of its global workforce. The company also plans to cuts costs in various divisions including finance, human resources, and marketing.

"This is something they have to do. If they don't do it, the company will have a huge loss," said J.P. Morgan analyst Charles Guo. "We believed they had to do something drastic. This 11 percent is within our expectations."

According to WRAL News, 250 jobs will be cut in the Raleigh-Durham, NC area which is home to Lenovo's headquarters. However, the company plans to hire 150 new employees for a call center in Morrisville, NC to replace a call center that is being closed in Toronto, Canada.

Executives weren't able to escape from Lenovo's cutback either. The company announced that executive compensation will be reduced 30 to 50 percent.

"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 Lenovo Chairman Yang Yuanqing. "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."

Lenovo's actions are expected to save the company $300 million USD for the 2009/2010 fiscal year.

Lenovo just recently announced its new ThinkPad W700ds notebook which features a large 17" main display and a 10" secondary display. The notebook is currently on display at CES in Las Vegas.

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The end is nigh
By Mithan on 1/8/09, Rating: 0
RE: The end is nigh
By ThisSpaceForRent on 1/8/2009 4:34:08 PM , Rating: 5
Please 3rd world? We're bringing back 2nd world with style. 2nd world is the new 1st!


RE: The end is nigh
By Penti on 1/9/2009 7:40:41 PM , Rating: 2
Are you becoming a communist country? 2 world is reserved for communist COMECON countries. Most of does went third world when the soviet union collapsed. Now if we're not using cold war classifications there is the developed world, the developing world and the least developed world or countries.

Your GDP basically has to drop below Mexico's for you to be considered a developing nation.


RE: The end is nigh
By Murloc on 1/8/2009 5:46:58 PM , Rating: 2
not the world, mostly the US.
Others will rise as winners, and change the world order.
US will not be the first industrialized power anymore.
Of course for this to happen the third world war will be fought.


Dell also laying off people
By Ashtar on 1/8/2009 1:43:01 PM , Rating: 2
I noticed that tech sites fail to post that Dell also announced today that by the end of the year it will close the factory in Limerick Ireland and lay off about 1900 people...




RE: Dell also laying off people
By The0ne on 1/8/2009 7:10:24 PM , Rating: 2
Dells been closing stores/plants since last year in addition to restructuring itself and the Alienware product lines.


By Beenthere on 1/9/2009 4:58:46 PM , Rating: 1
When are Americans going to E-mail the criminals on Capitol Hill and demand that they create U.S. jobs and balance the budget, or vote the bums out of office? I did, how about you?

http://www.visi.com/juan/congress/




It's not the economy's fault.
By Dreifort on 1/8/09, Rating: -1
RE: It's not the economy's fault.
By homebredcorgi on 1/8/2009 1:52:31 PM , Rating: 3
What on Earth are you smoking? They can't carry over profits from previous quarters to "cancel out" a loss on the current quarter. That's, why it is a loss for the previous quarter, not a bankruptcy. Big difference.

Read between the lines. If a company posts its first loss in 11 quarters, is cutting pay, and laying off employees, they probably don't have high hopes for the near future. Many companies have stopped giving guidance for future quarters (since it is terrible) because they don't want their stock to take a huge hit.

The economy is in much worse shape than anyone out there is saying. We have pinned all of our hopes on Obama. A second half recovery in 2009 is absurd (predictions made by the same people who thought we would turn the corner in the second half of 2008). Actions such as this, from Lenovo, further reinforce this point.


RE: It's not the economy's fault.
By Dreifort on 1/8/2009 2:01:24 PM , Rating: 1
But again, how is it the economy's fault?

And whre is their working capital (aka profits)?

If this was 2004 and had one bad quarter - would they cut 2,500 jobs then? It's all in company speculation. Apparently they didn't speculate in themselves to put aside enough operating capital to keep jobs safe.

If your argument is that these 2500 jobs were not core jobs but just expansion hires being trimmed, then how can you blame the economy for not allowing a business to expand? Is growth something we should be guaranteed by any economy?!? In Wonderland maybe having financial charts always go up is a great idea...but there is a word in financial industry called "cyclical". Nothing goes up forever, nothing goes down forever. Same principal is applied to how the earth spins around the sun and the moon around the earth.


By ThisSpaceForRent on 1/8/2009 4:32:24 PM , Rating: 1
You sir, are a fool.

If you want to find someone to blame for this mess, look more towards your neighbor who can't pay for his mortgage, or his numerous credit cards. Yes, banks gave credit to people who did not deserve it, but the ultimate responsibility for those spending decisions rests with the consumer and no where else.

Your blatant attack against one company, and not others, shows how ignorant you are of the greater picture. I don't know what your personal vendetta against Lenovo is, but take it somewhere else.


RE: It's not the economy's fault.
By WackyDan on 1/8/2009 9:14:09 PM , Rating: 2
You are a moron.

Lenovo managed to tough out some profits in the previous quarters when other companies were already reporting losses and somehow this quarter of loss signifies that they are doing something wrong and it's NOT tied to the economy? Companies don't perpetually grow, they a cyclical in nature just like the economy. Why are they predicting more tough quarters? - Because they know the business environment they produce and sell in best... there are various industry analysts that are predicting the same thing. At least they are making the right move now vs later when it would be more painful to more employees.


RE: It's not the economy's fault.
By Dreifort on 1/9/2009 9:07:21 AM , Rating: 1
again...HOW is it the economy's fault that a company making profits didn't plan to have any bad quarters?

it's not the economy's fault - it's the company's fault for not planning ahead.

Where is it a God given right to expect profits 24/7? If grandma and grandpa didn't plan ahead, do you think their grocery store would have survived 20 yrs with UPS and DOWNS in the nation's economy?

The only thing I am arguing is blaming the economy for a company that can't survive 1 bad quarter (without massive layoffs and panic)... so this "on no! more layoffs!" everytime there is news related to a company experiencing a bad quarter is the whole reason we won't be able to pull out of this down period anytime soon.

If you read the first sentance of this article...it says, becuase of the economy. And you just validated my argument with your reply. I'm not arguing about anything Lenovo does. My argument is blaming the economy.


RE: It's not the economy's fault.
By WackyDan on 1/9/2009 11:18:26 AM , Rating: 2
Again, you are proving how naive you are, both from a business and tech industry perspective. The writing is on the wall for Lenovo, Hp, Dell, etc.

A large part of Lenovo's revenue comes from large corporate customers. Large customers like that tend to be very much intertwined with their vendor that they forecast their purchases many months in advance to ensure pricing, supply, etc from their vendor - Lenovo, Dell, Etc.

It would be absolute idiocy for Lenovo to retain jobs it does not need for reduced volume in sales as compared to before, knowing that the decline in sales is not just a 1 quarter blip and operating at the same time in an extremely competitive industry whos margins are eroding with the economy.

I suggest You start with Economics 101, and maybe move up to a college level business course.... Or spend time actually working for a hardware vendor before you spout nonsense and then actually try to defend your stupidity for it.


RE: It's not the economy's fault.
By Dreifort on 1/9/2009 12:30:48 PM , Rating: 1
HP just posted POSITIVE quarterly earnings. You can't throw HP in with other companies just because the economy is suffering.

HP just proves that some companies will find a way to operate in good times and bad time without massive company overhauling.


RE: It's not the economy's fault.
By WackyDan on 1/9/2009 3:39:44 PM , Rating: 2
How stupid would you like to keep looking?

HP had massive layoffs back in September and October of 08. Near 25,000 employee were given their notices. This was done to remain profitable. I'd like to see their profits if any if they hadn't of done it.

IBM is about to layoff 16,000.

Dell within the past few weeks announced a complete global restructuring... Why don't you look up how many jobs they are tossing. While you're at it, look at what has happened to their market share and profit leading up to it.

Again, you prove time and again that you'll continue to try to bail yourself out of an overly simplistic view of the economy and how it relates to the actions of a single company.

Conversation over.


RE: It's not the economy's fault.
By Dreifort on 1/12/2009 9:49:37 AM , Rating: 2
no massive layoffs I know about. only jobs lost were any due to restructring of HP Labs. Not HP itself.

I actually got a bonus. Don't throw HP in with everyone else just to prove the economy is at fault. Is it the economy's fault you can't pay your mortgage? no. You didn't plan ahead. If you lost your job, then it sucks - but you can't blame the economy for not putting away money in savings to assist when such a thing might occur.


By homebredcorgi on 1/8/2009 10:04:49 PM , Rating: 2
It's the economy's "fault" in that excess debt from the last decade has finally caught up with us and has now resulted in people saving more and spending less (laptops from Lenovo included). Most companies are losing money right now because their operations were based off of sales from the last decade which were fueled by an increase in debt and not actual wealth. That growth in debt has finally reached a breaking point and can no longer be sustained, so spending (demand) has dropped off completely.

While I don't know the specifics of Lenovo's business, I don't believe they made any boneheaded moves over the last year that can be specifically blamed for their poor earnings. Feel free to name one.

What would you have them do? Use their cash on hand to pay employees that are (or will soon be) increasing their costs while they foresee smaller profits? How does that make sense? Microsoft has some of the largest cash reserves of any company (and was ridiculed for it over the last decade) and the rumor mill says they will be eliminating nearly 17% of their workers. If they had no capital to begin with, they would now be bankrupt. A very poor way to run a company.

They are merely adapting to the current environment. Again, reading between the lines, they must believe current sales will not recover for an extended period of time or perhaps get even worse. Had they cut 10% of their staff but thought everything would be fine next quarter, they would be idiots (which seems to be your assertion?). However, I see no evidence that this is the case.


"Google fired a shot heard 'round the world, and now a second American company has answered the call to defend the rights of the Chinese people." -- Rep. Christopher H. Smith (R-N.J.)











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