Lenovo to lay off 1,000, move headquarters to N.C.

Ben Ames   Today’s Top Stories    or  Other Hardware Stories  

Best practices for safe hardware disposal Beyond consolidation: five reasons why you should start virtualizing Myth of the Million Dollar Database Learn-Fast Guide: Get Up to Speed on Green IT Sign up to receive Security Resource Alerts

March 16, 2006 (IDG News Service) -- In response to market pressures in its desktop business, Lenovo Group Ltd. today announced it would lay off 1,000 employees and move its corporate headquarters from Purchase, N.Y., to Raleigh, N.C.

In a conference call with reporters, Lenovo President William J. Amelio said that Lenovo's notebook business is strong in developing and emerging markets, but that its desktop business faces severe competitive pressures.

"Lenovo leads the market in innovation. But we still have inefficiencies. We need to bring our expense-to-revenue ratio closer to industry benchmarks, and simplify our organizational structure," Amelio said.

The layoffs represent about 5% of the company's 21,400 employees. Lenovo managers will identify the workers by the end of March, spreading the cuts throughout company offices in the Americas, Asia-Pacific and EMEA (Europe, the Middle East and Africa) regions.

The changes make sense in terms of the competitive PC market, analysts said.

"Business desktops are a narrow, narrow margin business; they are almost a commodity. You have to be very efficient in order to make money selling desktops," said Gordon Haff, senior analyst at research company Illuminata Inc.

Lenovo faced a challenge achieving that efficiency because it was still struggling to integrate IBM's PC division into the rest of the company. Lenovo acquired that business in 2005.

The challenges in merging the two companies also help explain Lenovo's decision to move its headquarters.

"The ThinkPad group has always been located at IBM's Raleigh offices. I'm not sure what their reasoning was in the first place to have a small headquarters of 70 or so people, remote from everything else in the company," Haff said.

Lenovo Chairman Yang Yuanqing also cited integration challenges during a largely downbeat address he made to IBM's partners at the PartnerWorld conference in Las Vegas yesterday.

Yang noted that Lenovo's international business has only recently begun to turn a profit. He called for further integration of IBM's PC business within his company and for a transformation to "the new Lenovo."

One way he plans to achieve that vision is to diversify Lenovo's product offerings in the U.S. over the long term.

Yang stressed that Lenovo's core international focus for the next two years will be its PC business, with an emphasis on the small and midsize business market, which the vendor recently entered, along with plans to introduce consumer PCs later this year.

It's not Lenovo's "near-term" intention to introduce other products it offers in China such as servers, phones and printers internationally until "the second half of our five-year plan" running to 2010, Yang said.

In the meantime, Lenovo will roll out further organizational changes over the next six to 12 months, eliminating redundancies in certain departments, Amelio said today.

Lenovo will centralize its desktop team in China as one step toward moving its global supply chain closer to manufacturers and suppliers. And the company will reduce layers in its sales structure.

"Geographical leaders will report directly to me, improving my line of sight to our customers," Amelio said.

Those changes will help the company focus its global strategy on developing high-growth markets such as small and midsize businesses and emerging countries, he said.

Amelio cited the company's February launch of its Lenovo 3000 line of laptops and desktops as evidence that Lenovo is moving toward its goal of profitable growth.

The 3000 series is a family of low-cost PCs featuring a $349 desktop PC and a $599 laptop. Lenovo hopes to steal market share in the U.S. small and midsize business market now dominated by Dell Inc. and Hewlett-Packard Co.

Lenovo's plan will cost the company $100 million this year but will produce annual savings of $250 million, Amelio promised.

China Martens of the IDG News Service contributed to this report.

Reprinted with permission from

For more news from IDG visit IDG.net
Story copyright 2006 International Data Group. All rights reserved.

Print this Story

Send Us Feedback

E-mail this Story

Digg this Story

Slashdot this Story

"It's the early 1990s when this pilot fish is challenged to find a better way to support telecommuting — and..." Read more... "It's a cheaper IT Blogwatch: in which Apple cuts the price of the top-end MacBook Air. Not to mention dan..." Read more... Read more Hardware posts or See all Blogs

Microsoft promises four patches next week Google gives away home-cooked Web application security scanner Storm botnet stages Fourth of July attacks More top stories...

Microsoft trumpets security additions in upcoming IE8 Apple cuts price of high-end SSD MacBook Air by $500 Ultrathin showdown: Apple MacBook Air vs. Lenovo ThinkPad X300 vs. Toshiba Portege R500

This old laptop: Revitalizing an aging notebook on the cheap All it takes is a couple hours and about $125 to breathe new life into an old laptop. Here's how. Bill Gates moves on Is Microsoft's Golden Age over? What are Gates' most memorable quotes? Find out in Computerworld's complete coverage of the end of the Bill Gates era at Microsoft. Five things you should never tell your boss There are some things your CIO definitely doesn't want to hear. Also don't miss the flipside, Five things you should always tell your boss. Hands-On: Firefox 3 fixes what's broke and keeps what's right With its latest version, Mozilla's browser continues to raise the bar for what Web browsers should be. Windows Vista A to Z Reviews, analyses, how-tos, visual tours, hot issues and predictions about Microsoft's new OS. More Continuing Coverage After 9/11: Homeland SecurityAsk a Premier 100 IT LeaderBlackBerry Legal BattleData Security BreachesElectronic VotingFirefoxH-1B VisasHP's Boardroom ScandalHandheld DevicesHurricane Katrina AftermathMicrosoft Legal IssuesMicrosoft's VistaOpen SourceRFID TechnologySCO's Linux FightSarbanes-Oxley ActSpamVoice Over IPWi-FiWindows Meta File VulnerabilityWindows XP Service Pack 3 IT Careers 2010 Four years from now, the IT field will be a vastly different place. Will you be ready? More Special Reports Premier 100 IT Leaders 2007 Best in Class2006 Computerworld Horizon Awards2006 Premier 100 IT Leaders2006 Salary Survey2007 Best Places to Work in IT2007 IT Forecast2007 Premier 100 IT Leaders40 Years of ComputerworldASPs, Take TwoBest Places to Work in IT 2003Best Places to Work in IT 2004Best Places to Work in IT 2005Best Places to Work in IT 2006Business Intelligence Home RunsBusiness Intelligence: Smarter BIBusiness Intelligence: The Future of BICRM Goes VerticalCRM: Sober CRMCareer Planning Guide 2005Careers: IT Profession 2010Computerworld Horizon Awards 2005Data Management: Mining for GemsData Management: Taming Data ChaosDevelopment: Hard-Workin' Web SitesDevelopment: New Tools New ChoicesDevelopment: The New World of Application DevelopmentDevelopment: The Web Services TsunamiDevelopment: Web Services HurdlesDisaster Recovery: Preparing for the WorstE-commerce Grows UpE-mail/Groupware: Big DecisionsFaces of Mobile ITForecast 2006Global MobileHardware: Multiple Cores, Multiple ChallengesHardware: On-Demand Un-HypedHardware: The Shape of Things to ComeHorizon Awards: 10 Cool Cutting Edge TechnologiesIT Management: Guide to Managing VendorsIT Management: Navigating Global ITIT Management: Recovery AheadIT Management: The Future of ITIT Management: The Resourceful Project ManagerInnovative Technology Awards 2004Management: Reinventing ITMicrosoft in TransitionMobile/Wireless Leaders and LaggardsMobile/Wireless: The Untethered WorkerMobile/Wireless: Tiny Gadgets, Huge CostsNetwork Management: Taking ControlNetworking: Turbulence Ahead!Networking: VoIP Goes MainstreamOperating Systems: In the Slow LaneOperating Systems: Linux Goes GlobalOperating Systems: Should You Nix Unix?Outsourcing: Offshore Buyer's GuideOutsourcing: Outsourcing DangersPremier 100 IT Leaders 2004 Best in ClassPremier 100 IT Leaders 2005 Best in ClassROI: Do the Math!Salary Survey 2003Salary Survey 2004Salary Survey 2005Security Action PlanSecurity: Compliance HeadachesSecurity: Proactive SecuritySecurity: Risk and RewardSecurity: Tips From Security ProsSouped-up SecurityStorage: Battling ComplexityStorage: Cheap & Secure Data StoresStorage: Stretching Your Storage DollarsStorage: The Lean Storage MachineStorage: The New Rules of StorageStorage: The Ultimate Backup GuideSupply Chain: Missing LinksSupply Chain: RFID Reality CheckThe Business of SecurityWeb 2.0 SecurityWireless: Wireless At Work All Zones Application Performance Zone Business Continuity Zone Data Center Management Zone Enterprise-Class Security Zone The File Data Management Zone Grid Computing on Windows Zone Security Management Zone ITIL Best Practices Zone The SAS Zone Storage Virtualization Zone Business Intelligence and Analytics Zone See your link here

Learn-Fast Guide: Get Up to Speed on Green IT (Source: Computerworld) Whether it's in the front office or the server room, green thinking can save energy, trees and money. From the Editorial Staff at Computerworld, here's the latest thinking on greening your operations. Download this executive briefing  Virtualization Everywhere Download this white paper, free, compliments of Citrix. (Source: Citrix) Adoption of virtualization is concentrated among large enterprises, while adoption by mid-sized companies has been much slower. For these companies, the cost and complexity of server virtualization solutions has been a barrier. In this paper, we'll discuss how Citrix XenServer" provides simple, economical server virtualization for any size company. Download now! Download this white paper  Long Tail Supplier Collaboration - What's In It For You? Long Tail Supplier Collaboration - What's In It For You? Download this webcast, free, compliments of Sterling Commerce Go to the webcast  White Papers Read up on the latest ideas and technologies from companies that sell hardware, software and services. Deploying Virtualized NetWare on Linux Whitepaper Toward More Flexible, Next-Generation Collaboration Solutions Driving Business Success Through Workgroup Choice and Flexibility View more whitepapers

• Microsoft promises four patches next week
• Google gives away home-cooked Web application security scanner
• Storm botnet stages Fourth of July attacks
• More top stories 

Cost Effective Scaling with Virtualization and Coyote Point Systems An overview of the industry trend toward virtualization, how server consolidation has increased the importance of application uptime and the steps being taken to integrate load balancing technology with virtualized servers. Download this white paper now!

Get Into Gear! Check out our new personal technology section -- TechGear -- for the latest on those cool gadgets that you just gotta have! Host Mike Elgan provides hands-on reviews and analysis of the stuff that makes IT fun. Head to TechGear

Detect, identify, and locate RF interference in 802.11 WLANs. AnalyzeAir software provides IT network professionals with the vision they need into the hidden world of RF, providing them with the ability to see the spectrum in a visible and intelligible format. AnalyzeAir software lets you see, monitor, analyze, and manage all the RF sources and wireless devices that influence your Wi-Fi network's performance and security, even if those devices are unauthorized or transient. AnalyzeAir Trial Software v3.1 highlights the features found in AnalyzeAir Software using a set of saved spectrum files. Replay the data and experience the visibility that AnalyzeAir Wi-Fi Spectrum Analyzer provides. Note: The trial software is limited to a player version only. It does not communicate with an AnalyzeAir PC card so it does not collect actual spectrum data. Register for this trial now.