Len­ovo job cuts

Lay­offs part of par­ent com­pany’s ef­forts to im­prove for­tunes at its smart­phone unit

China Daily (USA) - - FRONT PAGE - By MENGJING mengjing@chi­nadaily.com.cn

Len­ovo Group Ltd con­firmed on Tues­day the lat­est round of lay­offs of about 1,000 work­ers, mostly from the over­seas Mo­torola unit, as it ad­dresses its loss-mak­ing smart­phone busi­ness.

Len­ovo Group Ltd con­firmed on Tues­day the lat­est round of lay­offs of about 1,000 em­ploy­ees, mostly from the over­seas Mo­torola unit, in a bid to turn around the for­tunes of the Chi­nese com­pany’s loss-mak­ing smart­phone busi­ness.

The world’s largest per­sonal com­put­er­maker, said inas­tate­ment that its “struc­ture op­ti­miz­ing” plan im­pacts less than 1,000 em­ploy­ees, mostly in coun­tries out­side China as part of the ef­fort of the “on­go­ing strate­gic in­te­gra­tion be­tween Len­ovo and its Mo­torola smart­phone busi­ness ”.

Len­ovo did not re­veal the de­tails of the lay­off, but a re­port from droid-life, a web­site fo­cus­ing on An­droid-re­lated news, said Mo­torola will take most of the hit with over 50 per­cent of the com­pany’s ex­ist­ing US staff los­ing their jobs.

In re­sponse to the mar­ket ru­mors about Len­ovo shift­ing the Mo­torola head­quar­ters away from Chicago, the com­pany said: “Len­ovo is ab­so­lutely com­mit­ted to Chicago and we plan to main­tain our Mo­torola Mo­bil­ity head­quar­ters there.”

The lay­offs, which rep­re­sents less than 2 per­cent of the Hong Kong-listed Len­ovo’s 55,000-strong work­force glob­ally, is the lat­est round af­ter Len­ovo bought the Mo­torola hand­set busi­ness from Google Inc for $2.8 bil­lion in 2014.

Xiang Li­gang, a tele­com ex­pert and CEO of the in­dus­try web­site cc­time.com, said the move is ex­pected to help Len­ovo cut costs and turn around its smart­phone busi­ness.

“I think it is a good move. Len­ovo should have done it ear­lier. Apart from cut­ting costs, elim­i­nat­ing some jobs could also help align the or­ga­ni­za­tion and im­prove ef­fi­ciency,” he said.

How­ever, James Yan, re­search direc­tor at Coun­ter­point Tech­nol­ogy Mar­ket Re­search, said cut­ting costs alone would not be enough for Len­ovo to re­vive its smart­phone busi­ness.

The first quar­ter in 2016 saw Len­ovo’s dis­ap­pear­ance from both the top five smart­phone ven­dor rank­ing and the top 10 mo­bile phone ven­dor list as its smart­phones sales in China plum­meted by 75 per­cent, sta­tis­tics from Gart­ner Inc showed.

“The China mar­ket ac­counts for one-third of the world’s to­tal smart­phone mar­ket, while Len­ovo has been los­ing mar­ket share to do­mes­tic ri­vals such as Huawei and oppo,” said Yan.

The com­pany has been beef­ing up to go higher-end to boost its sales.

In June, the com­pany un­veiled Phab2 Pro, the world’s first smart­phone to host ar­gu­mented re­al­ity ap­pli­ca­tions, and the Moto Z mod­u­lar series, whose high-pow­ered mag­nets can al­low users to up­grade the hand­set with ad­di­tional equip­ment such as speak­ers and pro­jec­tors.

Many an­a­lysts, in­clud­ing Xiang, are bet­ting big on Levono’s new smart­phone prod­ucts, say­ing the Moto Z mod­u­lar series are quite in­no­va­tive.

But Yan ex­pressed his con­cerns over the brand. “The brand of Mo­torola in many places is perceived as old and slow. More ef­forts has to be done to make its shine again among young peo­ple,” he said. Ma Si con­trib­uted to this story

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