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Troubled Lenovo Reports Loss, Appoints New CEO

Lenovo Group announced a net loss of $97 million for the quarter ended Dec. 31, down from net income of $172 million during the same period a year ago. The company cited continuing decreases in worldwide commercial PC shipments. Globally PC shipments dropped 5 percent and in China they dropped 7 percent for Lenovo. "In […]

Written By

Kathleen A. Martin

Feb 5, 2009

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Lenovo Group announced a net loss of $97 million
for the quarter ended Dec. 31, down from net income of $172 million during the
same period a year ago. The company cited continuing decreases in worldwide
commercial PC shipments. Globally PC shipments dropped 5 percent and in China they dropped 7 percent for Lenovo.

"In the past quarter, same as many other companies, Lenovo was deeply
impacted by the global economic turmoil," says Yang Yuanqing, who is
assuming the role of CEO following the resignation of CEO
William Amelio, who had come to the end of his three-year contract.

Yuanqing currently serves as chairman of the board, and had served as CEO
from 2001 to 2004.

"Over the past three years, we’ve implemented a successful international
strategy and Lenovo has joined the ranks of the top global PC companies,"
Amelio says in a statement. "Our brand is recognized around the world, we
have developed a solid reputation for quality and innovation, and our customer
service is second to none. I’m pleased with what we have accomplished as a
team."

Amelio, a former Dell executive, joined Lenovo several months after its 2005
acquisition of the PC business of IBM.
This acquisition was viewed by many as the landmark event that created one of China’s first true multinational companies and quickly
moved Lenovo into the upper ranks of the global PC industry.

Lenovo also announced that Lenovo founder and board member Liu Chuanzhi has
returned as chairman and Rory Read, Lenovo’s senior vice president of
operations, has been named to the newly created position of president and chief
operating officer.

None of these announcements have come as a surprise. On Jan. 8, Lenovo
announced a restructuring program that included laying off approximately 2,500
employees and offered guidance on its dismal earnings.

During the fourth quarter of 2008, Lenovo’s share of global PC unit sales fell
to 7.2 percent in 2008 from 7.4 percent in 2007, according to Gartner. Acer’s
share in the same period jumped to 11.8 percent from 9.4 percent.

As previously reported by Channel Insider, Lenovo is looking to increase its
position with products
focused on the growing small and midsize business market. This message
was restated Feb. 5. "Lenovo has focused in the international markets on IBM’s
products and customers, which are mainly large corporate customers," Liu
says. "But in the current economic crisis, corporate customers have been the
most affected. So right now we should emphasize China and emerging markets, and consumer customers."

Troubled Lenovo Reports Loss, Appoints New CEO

Kathleen A. Martin

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