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Losses mount at Lenovo, but chairman says no more layoffs

Lenovo falls deeper in red

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The world’s deepening financial crisis help drive losses to deeper levels at PC maker Lenovo, but the company’s chairman sought to reassure its employees by saying he plans no further layoffs.

Liu Chuanzhi, one of the world’s fourth largest PC maker founders who returned to the chairman’s role in February in a management shakeup, told reporters Thursday in Hong Kong that no more layoffs were planned. Lenovo began cutting 11 percent of its workforce in January, including some reductions at its Triangle campus.

According to Reuters, Chuanzhi also declined to lay out a timetable for a return to profitability.

The company recently announced a series of new “netbook” laptop computers designed to capitalize on the growing global demand for smaller, less expensive mobile devices.

Lenovo’s global headquarters are in Morrisville although most of its operations and sales are in China where the company was launched 25 years ago. It also operates a second headquarters in Beijing, and its shares are traded on the Hong Kong stock exchange.

In its quarterly earnings announcement, Lenovo reported a loss of $264 million for the period ending March 31. Losses exceeded expectations of analysts polled by Thomson Reuters and Bloomberg. The Thomson Reuters poll expected a $186 million loss. The Bloomberg poll projected a $211 loss.

“The past two quarters have been a particularly challenging time in our industry worldwide, and we took some significant steps to get our business back on the right path,” Liu said in a statement.

“We remain committed to growing our business profitably worldwide, and while our performance in the fourth fiscal quarter did not meet our expectations, we are confident that we have the right pieces in place to hit our financial targets and be ready to take advantage as economic conditions improve,” he added.

However, Lenovo acknowledged that its PC shipments have been hit harder than the overall industry.

“During the fourth quarter, Lenovo’s worldwide PC shipments declined 8.2 percent year over year, due to a continued decrease in commercial PC shipments worldwide, and the Company’s under-representation in consumer markets,” Lenovo said in its earnings report. “Overall industry PC shipments declined 7 percent worldwide for the same period.”

Yang Yuanqing, who had been chairman and replaced William Amelio as chief executive officer as part of the shakeup, said Lenovo was making progress despite the increasing loss.

“We have taken decisive actions in response to the economic downturn in order to align our overall business with the changing marketplace, and we are already seeing positive results from these actions,” Yang said. “Driving for growth and profitability, we will continue to protect and strengthen our leadership position in China, and accelerate the return of our worldwide commercial business to profitability. At the same time, we will aggressively sharpen our focus on the growth opportunities in emerging markets, as well as with consumer and small and medium business customers worldwide.”

A year ago in the same quarter, Lenovo posted a $140 million profit.

For the October-December quarter, Lenovo lost nearly $97 million.

This most recent quarter, revenues dropped 26 percent to $2.77 billion even though Lenovo sales in China increased.

For the year, Lenovo lost $226.4 million with revenues dropping nearly 9 percent to $14.9 billion.