Lenovo, the world’s largest PC manufacturer, reports its first annual loss in six years as revenues decline 3 percent. The company cites several reasons for the drop, including a huge decline in smartphone sales as well as internal “operational issues,” in the words of Chairman and CEO Yang Yuanqing.

No reorganizational changes were disclosed in the earnings report, although Lenovo did rename its server business. Located in the Triangle near Lenovo’s global executive headquarters in Morrisville, the server business previously known as the Enterprise Business Group will be called the Data Center Group.

Analysts had recently predicted Lenovo’s troubles and written down the value of its shares, which are traded in Hong Kong.

The loss of $128 million was higher than the $126.6 million as expected by analysts at Thomson Reuters.

Fourth quarter revenue fell 19 percent year-over-year to $9.1 billion.

Cost-cuts, layoffs and other changes saved $690 million, Lenovo noted.

Revenues fell 3 percent year-over-year to $44.9 billion.

A big reason for the loss: Turbulence in the world’s largest smartphone market – China – where Lenovo phone sales plunged 85 percent. Lenovo is no longer in the top five among global smartphone sellers.

The annual loss is the first Lenovo has reported in six years, according to Reuters.

Losses would have been worse had the company not made layoffs and organizational changes over the past year, Yang noted in comments about the earnings.

“Last quarter, despite challenging economic and industry conditions that hurt our top line, the decisive actions we took mid-year allowed us to protect our profitability,” he explained.

“We kept our core PC business strong, continuously improved profitability in enterprise and saw positive momentum in some key smartphone markets.

“Facing the operational issues in the businesses, we have already taken a number of proactive actions, including making key decisions in organization, leadership, products and channels to get back to growth in mobile, and adopting a new multi-business operating system to unleash the productivity and creativity of each business.

“At the same time, we will integrate our traditional strength in end-user devices with our new capabilities in cloud and infrastructure to attack the balanced Device + Cloud opportunities.”