Lenovo offices in China (photo by Cory M. Grenier / flickr)
Lenovo, the world’s largest computer manufacturer, on Friday published its report for the third quarter – the three months that ended on December 3 – and managed to surprise badly even in light of the initially low expectations of the market in light of the situation in the field.
Lenovo’s revenues fell by 24% to $15.26 billion – the sharpest drop it has recorded in 14 years (in the fourth quarter of 2008 – that is, 04/12/2008-03/03/2009 – it fell by 26%, due to the economic crisis previous global), and a huge miss of analysts’ revenue forecasts of $16.39 billion. In the bottom line, it registered an even sharper drop, of 32%, to a net profit of 437 million dollars.
The company stated that in the smart devices division (computers, smartphones, etc.) the decline was even sharper – a 34.2% plunge in revenues and a 35% drop in operating profit.
The CEO, Yuanqing Yang, defined the quarter in question as “the worst period” for the computer market (presumably he meant ever), and emphasized that the entire market was experiencing a “sharp downward turn”. He admitted that Lenovo would have to cut costs. CFO , Wei-Ming Wong, added that the company’s goal is to cut $150 million in expenses in order to double the profit rate, while “total reduction in operating expenses, as well as personnel adjustments in the necessary and appropriate places” – that is, layoffs.
Today, Lenovo employs about 75,000 people. Its major competitors in the computer market, HP and Dell, have already recently announced the layoffs of 6,000 and 6,650 employees, representing 12% and 5% of their employees, respectively.
Lenovo shares on the Hong Kong Stock Exchange fell by 3.14%.
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