Lenovo to axe 2,500 jobs; to save $300 mn

BEIJING: Computer maker Lenovo will slash 2,500 jobs worldwide and reduce executive compensation by 30 to 50 per cent, as part of its efforts to improve efficiencies and cut costs in the face of the global economic downturn.

"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," Lenovo's President and Chief Executive officer William J Amelio said.

The company is expected to reduce its number of employees worldwide by 2,500, approximately 11 per cent of its total workforce, which includes management and executive positions, in the first quarter of 2009, the company said ina statement.

The company expects to realise savings of approximately USD 300 million in the 2009-2010 fiscal year (ending March 31, 2010) from these restructuring actions, the statement added.

The company is also reducing expenses in support and staff functions, such as finance, human resources and marketing, it said.

The firm also plans to reduce executive compensation by 30 to 50 per cent, including merit pay and long-term incentives and all performance payments for the coming year.

"We are taking these actions now to ensure that in an uncertain economy, our business operates as efficiently and effectively as possible, and continues to grow in the future," Lenovo Chairman of the board Yang Yuanqing said.

As part of restructuring plan the company is consolidating its China and Asia-Pacific organisations, which are run as separate business units, into a single business unit Asia- Pacific and Russia (APR). The new organisation would help the company reduce its operating expense and eliminate duplicative support and staff functions, it added.