Small number of job cuts at Lenovo in Morrisville

May. 21, 2013 @ 06:21 PM

China-based Lenovo cut a small number of jobs at its headquarters in Morrisville as it looks to invest more heavily in higher-growth areas amid declines in global personal computer shipments.

Personal computers make up about 90 percent of Lenovo’s business, and the industry has “slowed dramatically,” company spokesman Ray Gorman said in an email.

He said the company is looking to invest in areas such as tablets, smartphones and convertible device technology, and to reduce expenses in slower-growth areas. Lenovo calls its high-growth segment PC Plus, he said.

“This is a rapidly changing market, so we must continue to reduce costs where we have to, invest where it fits our strategy and run our business as efficiently and as effectively as possible to both meet our short-term challenges, and ensure our future growth,” Gorman said.

To decrease expenses in areas impacted by the shift from traditional personal computers, Gorman said the company cut some contractor jobs and reduced staffing levels last week in certain areas at the Morrisville headquarters.

The cuts were to roles no longer required as the company looks to focus more on the PC Plus strategy, he said. He said the number was small enough that Lenovo will not be announcing or reporting it.

In the bigger picture, Gorman said Lenovo has grown its N.C. employee base by a third since 2008. The company moved a call center here from Toronto and shifted support jobs here from India, and also opened a manufacturing line in Whitsett, near Greensboro.

 “Our commitment to the Triangle and to (North Carolina) remains strong, and that will not change,” he said.

David Daoud, a research director at IDC Corp., said in email that although Lenovo has executed better than its competitors for many quarters, it is also faces a similar demand environment that has been “consistently weakening.”

In the first quarter of this year, global personal computer shipments were down about 14 percent compared to the same period last year, according to the International Data Corp. Worldwide Quarterly PC Tracker.

That was the largest decline since 1994 when IDC began tracking the data quarterly. That was also the fourth consecutive quarter of year-over-year declines.

The U.S. market saw a 13 percent drop in shipments in personal computers year-over-year in the quarter, marking the 10th consecutive quarter of year-over-year declines, excluding a less than 2 percent year-over-year growth period in the third quarter of 2011.

In the Asia/Pacific region, not including Japan, personal computer shipments were down by almost 13 percent for the first double-digit decline for the region.

IDC reported that while restructuring and reorganizations at HP and Dell added to the impact of slow demand, Lenovo was a “notable exception” due to its attack strategy.

Lenovo saw double-digit growth in the United States, but its overall growth was flat as shipments in the Asia/Pacific region fell, according to IDC Corp.

Comparatively, the market for smartphones grew 41.6 percent in the first quarter of this year, according to IDC Corp.’s Worldwide Quarterly Mobile Phone Tracker. Ramon Llamas, research manager with IDC’s Mobile Phone team, said in a statement in IDC’s release that Chinese companies, including Lenovo, have made “significant strides” in capturing new smartphone users with their Android phones.

Daoud said that in the longer-term for Lenovo  – and any company in the industry – the challenge is to manufacture not only products that are relevant to consumers with designs that matter, but also to expand into new categories.

“Such (a) strategy would have to be offerings above and beyond hardware, and a move into content, content delivery, etc...,” he said in an email. “I am confident Lenovo is aware of these challenges.