Chinese computer giant Lenovo Group Ltd (聯想) announced yesterday it would cut about 2,500 jobs, roughly 11 percent of its worldwide work force, after suffering losses amid the global economic crisis.
The company said in a statement that the “resource redeployment plan” would help save US$300 million in the fiscal year ending March 31, 2010.
“The company expects to reduce the number of its employees worldwide by 2,500 during the first quarter of 2009, approximately 11 percent of its total work force,” it said, adding that the cuts would include management and executive positions.
PHOTO: BLOOMBERG
“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,” Lenovo chairman Yang Yuanqing (楊元慶) said in the statement.
“We are taking these actions now to ensure that in the uncertain economy, our business operates as efficiently and effectively as possible, and continues to grow in the future,” he said.
Lenovo, the fourth-biggest personal computer maker in the world, came to worldwide prominence when it bought IBM’s personal computer unit in 2005. It had seen double-digit growth in profits until the third quarter of last year.
The company said in a separate statement sent to the Hong Kong stock exchange yesterday that preliminary estimates showed it would make a loss in the last three months of 2008.
It said it believed the potential loss is a result of slowing demand for personal computer and related products amid unprecedented global economic challenges. Although Lenovo said it had seen reduced demand around the world it specifically identified problems in China.
“The slowing down in the Chinese economy ... has also affected what has historically been a major market for the group,” it said.
The company said it would also merge its operations in China, the Asia Pacific and Russia to increase efficiency. The new unit will be headed by Chen Shaopeng (陳紹鵬), a senior vice president at Lenovo and president of the firm’s Greater China division. It also announced that Scott DiValerio, who headed the sales organization for the Americas, would be leaving and replaced by Rory Read, senior vice president of operations, as part of its streamlining effort.
Executive compensation, including merit pay and long-term incentives, will be cut by between 30 percent and 50 percent, the group said.
The company’s shares plunged 20 percent to HK$2.07 (US$0.27) at 3:37 GMT yesterday, after trading in its stock was suspended on Wednesday pending the release of the profit warning.
Ample Finance Group’s Alex Wong forecast a bleak outlook for Lenovo and predicted the company would underperform this year.
“This is one stock I won’t buy,” he told Dow Jones Newswires.
A Chinese freighter that allegedly snapped an undersea cable linking Taiwan proper to Penghu County is suspected of being owned by a Chinese state-run company and had docked at the ports of Kaohsiung and Keelung for three months using different names. On Tuesday last week, the Togo-flagged freighter Hong Tai 58 (宏泰58號) and its Chinese crew were detained after the Taipei-Penghu No. 3 submarine cable was severed. When the Coast Guard Administration (CGA) first attempted to detain the ship on grounds of possible sabotage, its crew said the ship’s name was Hong Tai 168, although the Automatic Identification System (AIS)
An Akizuki-class destroyer last month made the first-ever solo transit of a Japan Maritime Self-Defense Force ship through the Taiwan Strait, Japanese government officials with knowledge of the matter said yesterday. The JS Akizuki carried out a north-to-south transit through the Taiwan Strait on Feb. 5 as it sailed to the South China Sea to participate in a joint exercise with US, Australian and Philippine forces that day. The Japanese destroyer JS Sazanami in September last year made the Japan Maritime Self-Defense Force’s first-ever transit through the Taiwan Strait, but it was joined by vessels from New Zealand and Australia,
CHANGE OF MIND: The Chinese crew at first showed a willingness to cooperate, but later regretted that when the ship arrived at the port and refused to enter Togolese Republic-registered Chinese freighter Hong Tai (宏泰號) and its crew have been detained on suspicion of deliberately damaging a submarine cable connecting Taiwan proper and Penghu County, the Coast Guard Administration said in a statement yesterday. The case would be subject to a “national security-level investigation” by the Tainan District Prosecutors’ Office, it added. The administration said that it had been monitoring the ship since 7:10pm on Saturday when it appeared to be loitering in waters about 6 nautical miles (11km) northwest of Tainan’s Chiang Chun Fishing Port, adding that the ship’s location was about 0.5 nautical miles north of the No.
SECURITY: The purpose for giving Hong Kong and Macau residents more lenient paths to permanent residency no longer applies due to China’s policies, a source said The government is considering removing an optional path to citizenship for residents from Hong Kong and Macau, and lengthening the terms for permanent residence eligibility, a source said yesterday. In a bid to prevent the Chinese Communist Party (CCP) from infiltrating Taiwan through immigration from Hong Kong and Macau, the government could amend immigration laws for residents of the territories who currently receive preferential treatment, an official familiar with the matter speaking on condition of anonymity said. The move was part of “national security-related legislative reform,” they added. Under the amendments, arrivals from the Chinese territories would have to reside in Taiwan for
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