Lenovo president and CEO William J. Amelio
Lenovo will cut 20% of its workforce at its Raleigh, NC headquarters

Just over a year ago, Lenovo announced plans to lay off 1,000 employees and the decision to transfer its headquarters from Purchase, NY to Raleigh, NC. At the time, the job cuts represented 5% of Lenovo's global workforce of 21,400 employees and were credited in helping the company return to profitability.

One year later Lenovo has managed to become the world's #3 manufacturer of PCs behind HP and Dell. However, the company is once again cutting jobs. The company will cut 1,400 jobs globally which will represent another 5% decrease. The cuts are expected to save the company roughly $100 million USD during the 2007-2008 fiscal year. The company will also take a pre-tax restructuring charge of between $50 to $60 million USD for its first fiscal quarter which ends on Jun 30, 2007.

"To win in the PC industry, our path is very clear," said president and CEO William J. Amelio. "We must deliver the world’s best-engineered PCs, offer our customers an unrivaled ownership experience, and grow faster and more profitably than the rest of the industry. This means we must make our organization more efficient by reducing expenses."

"There is no doubt we have made strong progress in the past year, but it's clear we need to further accelerate that progress to be as profitable and cost efficient as the rest of the industry," said Amelio. "Today's actions are necessary to enable us to reduce expenses and grow our business."

For Lenovo's operations in the Research Triangle Park (RTP), 350 employees will be laid off. This represents one-fifth of the 1,600 employees working at Lenovo's Raleigh headquarters.

"I think most employees understand that (these) actions reflect the realities of our fiercely competitive industry," said Ray Gorman, a spokesman for Lenovo. "These are difficult and certainly painful decisions and we do not take them lightly."

As is the growing trend with many companies in today's cut-throat market, 750 of the jobs will be transitioned to overseas locations where labor is cheaper. The remaining 650 positions are simply being eliminated. "This is really about jobs moving to emerging markets, such as Brazil, Eastern Europe, India and China," Gorman continued.

The average annual salary for Lenovo employees in the RTP area is $70,000.

"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer
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