Lenovo to cut 2,500 jobs, book quarterly loss

PC-maker Lenovo is to cut 2,500 jobs - nearly 11% of the company's workforce - and has warned that it expects a loss for the December quarter.

The China-based firm, which has been struggling with a sharp downturn in its home market as well as the global recession, also said it would reduce executive compensation by up to 50%.

Lenovo, the world's fourth-largest PC manufacturer, hopes to save around $300 million in the coming financial year as a result of the cutbacks.

As part of its streamlining efforts, Lenovo will consolidate its Chinese and Asia-Pacific operations into a single Asia Pacific and Russia business unit.

"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 CEO William J. Amelio. "As hard as this news is for all of our employees, we believe the steps we are taking today are necessary for Lenovo to compete in today's economy."

Lenovo's net profit slumped 78% last quarter, the lowest since its acquisition of IBM's PC business.

But chairman Yang Yuanqing said that the 2005 acquisition had been "a success" for the company.

Lenovo's shares fell 26% to close at HK$1.91 ($0.24) yesterday as the market reacted to the announcement.