Lenovo reports sharp profit drop

Lenovo reports sharp profit drop

Chinese computer and smartphone company Lenovo has reported quarterly results, missing expectations and announcing worldwide job cuts.

Lenovo reports sharp profit drop

The firm’s net profit plunged by 51% compared to the same quarter last year to $105m (£67m).

Quarterly revenue, however, rose by 3%, still short of market expectations.

The firm posted a steep decline in sales for its mobile division, reflecting intense international competition on the smartphone market.

Lenovo, the world’s biggest PC-maker, said it plans to lay off around 10% of its worldwide non-manufacturing employees, about 3,200 jobs, as part of overall cost-cutting measures aimed at saving $650m in the remainder of 2015.

Lagging smartphone sector

Lenovo reported significant declines in its global computer and tablet sector, as well as increasing competition and slowing growth in the smartphone market.

Chief executive Yuanqing Yang said the company would also restructure its smartphone business amid the “toughest market environment in recent years”.

The company last year bought the Motorola brand from Google for $2.9bn to boost its position on the market, citing “intensifying competition and long product development lifecycles” as particular challenges in the sector.

Lenovo’s mobile division saw a pre-tax loss of $292m in the three months to the end of June.

According to Lenovo, its PC business reached a worldwide share of 20.6%, with a 13% share in the critical US market.

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