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Lenovo plans 'price sensitive' announcement, suspends trading

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Trading in shares for PC manufacturer Lenovo were suspended in Hong Kong on Wednesday after the company said it would announce “price sensitive” information.

Lenovo, which operates its global headquarters in Morrisville but bases most of its operations in China, has been the focus of recent rumors concerning a major restructuring. Recent reports have said Lenovo would announce changes in operations on Jan. 8. Reuters and other news sources reported the suspension of Lenovo trading on Wednesday.

The statement, which Lenovo provided to Local Tech Wire and WRAL.com:

“At the request of Lenovo Group Limited (the “Company”), trading in the shares of the Company will be temporarily suspended with effect from 9:30 a.m. on January 7, 2009 pending the release of an announcement by the Company which is price-sensitive in nature.”

News of cost cuts and other changes had triggered a surge of 17 percent in Lenovo shares, which are traded in Hong Kong, over the past two days.

Media reports in China have said the restructuring could include a shakeup in corporate management, a reorganization and consolidation of operations, and layoffs at its operations in Beijing.

Lenovo purchased IBM’s personal computing division, which was largely based in the Research Triangle area, in 2005 for more than $1 billion. Lenovo chose to its headquarters to Morrisville from facilities it inherited in the IBM deal in New York.

A restructuring last fall led triggered a reduction of some 50 positions at Lenovo's Triangle-based operations and an undisclosed number elsewhere across the company.

Chinese media also has speculated lately that there could be changes in the company’s top management. Lenovo reported a 75 percent drop in profits last quarter and since then has pulled out of negotiations to acquire the top PC maker in Brazil.

As part of the restructuring, China Business News said David Miller, Lenovo’s president for the Asia Pacific region, could step down. If so, a likely replacement is Chen Shaopeng, president of Lenovo’s Greater China region.
"The economic conditions are so tough that (the company) is set to take some measures to counter the winter," the paper quoted Chen as saying.

David Miller, president for the Asia Pacific region, is expected to resign and Chen Shaopeng, now president of the Greater China region, would head the merged operations, the newspaper said.

Even though Lenovo shipped more computers through the first three quarters of 2008 than in 2007, its global marketshare shrank to 7.4 percent from 8 percent.

Reuters reported that Goldman Sachs called for Lenovo to “better streamline” its organization in a research note.

Lenovo’s stock has fallen in value some 70 percent over the past year, according to Reuters.