Lenovo To ‘Streamline Product Portfolio’ And Cut 3,200 Employees Due To Weakening PC Market

The PC market has been limping along for years and the lackluster sales have taken a toll on Lenovo, which announced today that it is planning to lay off as many as 3,200 employees. The company simultaneously announced plans to restructure its Mobile Business Group (MBG), which includes Motorola, in an effort to improve its smartphone development.

Lenovo Chairman and CEO Yuanqing Yang announced the job cuts today in an email to employees. The cuts are meant to help Lenovo reach its goal of 30 percent market share in the PC market. (Lenovo estimates that is has about 20.6 percent of the market now.) Although Lenovo has a large worldwide staff, the cuts are significant: the 3,200 people losing their jobs represent 10 percent of Lenovo’s non-manufacturing employees.

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“Our core PC business was still strong and we expanded our lead globally,” said Yang in the email. “But in a declining market we must continue to become more efficient and reduce expenses so we can make sure this business remains healthy and profitable.”

Yang said the changes would be completed “ASAP.” Lenovo estimates that the cuts and restructuring of the mobile group will save the company about $650 million in expenses in the second half of the year, though it pegs restructuring costs and expenses related to clearing smartphone inventory at about $900 million.

Lenovo’s mobile group restructuring means that Motorola will take the lead role in all major aspects of smartphone production, including design, development, and manufacturing.

“We do not make these moves lightly,” Yang said in the email to employees. “I know how hard our people work. But we must ensure our long-term success and ability to meet our goals and commitments. We will act with logic and respect, speed and precision, clarity and consistency as we make these changes. When we emerge from this effort, we will be a faster, stronger, better integrated and aligned global company.”