Electronics Production | April 20, 2007

Lenovo plans to cut jobs

The company expects to make a resource reduction of approximately 1,400 (including contractors) throughout the Americas, Asia/Pacific and EMEA, or roughly five percent of Lenovo's global workforce.
Of this number, approximately 750 positions will be transitioned into emerging markets closer to Lenovo's suppliers and manufacturing operations. The net effect is a global workforce reduction of about 650 positions, with most of these changes expected to be completed within one to twelve months.

The company expects to realize savings of approximately US$100 million in the 2007-08 fiscal year (which began on April 1), the majority of which will be reinvested back into the business to support the company's strategic initiatives. The company anticipates taking a pre-tax restructuring charge of approximately US$50 to $60 million, most of which will be taken in the first fiscal quarter, which ends June 30, 2007.

These actions are the result of a thorough analysis of both Lenovo's global operations and current PC market conditions. They will streamline processes and consolidate Lenovo's expertise across the globe, enabling the company to meet customer needs more efficiently and operate more competitively. The key components of Lenovo's action plan are as follows:

1. Further strengthen supply chain and capture more efficiencies by streamlining the global supply chain organization and aligning more work closer to supply base;

2. Integrate software testing into Lenovo's China operations;

3. Further integrate key customer support functions;

4. Streamline Sales and Marketing organizations; and

5. Centralize teams and align multi-national investments and resources.

In Europe, Lenovo will immediately launch the process of consultation with workforce representatives, as appropriate, regarding the plan's intended efficiency gains and cost structure reductions.
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