Plan B
The announcement of redundancies always seems to lend itself to euphemism, and Chinese system builder Lenovo didn't disappoint with the unveiling of its "Resource Redeployment Plan".
This is the PC maker's response to a drop in demand accompanying the global recession. Essentially it amounts to axing 2,500 jobs, this quarter, and reducing executive compensation by 30 to 50 percent. The move was heralded when Lenovo suspended trading of its shares yesterday.
"Although the integration of the IBM PC business for the past three years was a success, our last quarter's performance did not meet our expectations," said Yang Yuanqing, Lenovo's chairman of the board. "We are taking these actions now to ensure that in an uncertain economy, our business operates as efficiently and effectively as possible, and continues to grow in the future."
As had been rumoured, Lenovo is consolidating its APAC operations into a single Asia Pacific and Russia (APR) group. It will be headed up by the current head of the Chinese operation - Chen Shaopeng - while current APAC boss - David Miller - moves on to new challenges, or something like that. The Americas boss - Scott DiValerio - also walks the plank.
Lenovo is expecting all these measures to save it $300 million in the financial year ending 31st March 2010. However, the charge associated with this restructuring will be $150 million. "The actions we are taking today are not easy, and we will act with compassion and respect for the individuals in our company who are most affected," said William J. Amelio, who remains as Lenovo's president and CEO.
