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BEIJING - Lenovo Group Ltd, the world's No 3 personal computer maker, has approved a preliminary plan to slash more than 1000 jobs to cut costs as price competition remains intense, a source close to the company said today.
The job cuts would come mostly in the United States, and while most would be layoffs, some workers would be redeployed.
The move would cost between US$50 million ($71.3 million) and US$75 million in a one-off writeoff, the source said.
Lenovo hopes the plan will save it between US$150 million and US$175 million annually in a move that comes about a year after a similar plan to lay off 1000 workers was announced.
Last March, the company said it would cut about 5 per cent of its work force to slash costs in an effort to reshape the PC unit it bought from IBM .
The new plan indicates the company did not achieve the cost savings that it had originally anticipated, the source said.
Lenovo, China's largest PC maker, has said last year's layoffs were part of a six- to 12-month plan to save US$250 million annually in costs, following its US$1.25 billion purchase of the IBM PC business which included Thinkpad notebooks in May 2005.
The Chinese company is stepping up competition with market leaders Dell Inc and Hewlett-Packard Co.
Lenovo posted a 23 per cent gain in profits in the December quarter, its best showing since it bought IBM's loss-making PC arm, as it held costs down.
However, revenues were flat, indicating the company was not making inroads into markets such the United States and Japan, where shipments declined.
- REUTERS
