Layoffs part of parent company's efforts to improve fortunes at its smartphone unit
Lenovo Group Ltd confirmed on Tuesday the latest round of layoffs of about 1,000 employees, mostly from the overseas Motorola unit, in a bid to turn around the fortunes of the Chinese company's loss-making smartphone business.
The world's largest personal computer maker, said in a statement that its "structure optimizing" plan impacts less than 1,000 employees, mostly in countries outside China as part of the effort of the "ongoing strategic integration between Lenovo and its Motorola smartphone business".
Lenovo did not reveal the details of the layoff, but a report from droid-life, a website focusing on Android-related news, said Motorola will take most of the hit with over 50 percent of the company's existing US staff losing their jobs.
In response to the market rumors about Lenovo shifting the Motorola headquarters away from Chicago, the company said: "Lenovo is absolutely committed to Chicago and we plan to maintain our Motorola Mobility headquarters there."
The layoffs, which represents less than 2 percent of the Hong Kong-listed Lenovo's 55,000-strong workforce globally, is the latest round after Lenovo bought the Motorola handset business from Google Inc for $2.8 billion in 2014.
Xiang Ligang, a telecom expert and CEO of the industry website cctime.com, said the move is expected to help Lenovo cut costs and turn around its smartphone business.
"I think it is a good move. Lenovo should have done it earlier. Apart from cutting costs, eliminating some jobs could also help align the organization and improve efficiency," he said.
However, James Yan, research director at Counterpoint Technology Market Research, said cutting costs alone would not be enough for Lenovo to revive its smartphone business.
The first quarter in 2016 saw Lenovo's disappearance from both the top five smartphone vendor ranking and the top 10 mobile phone vendor list as its smartphones sales in China plummeted by 75 percent, statistics from Gartner Inc showed.
"The China market accounts for one-third of the world's total smartphone market, while Lenovo has been losing market share to domestic rivals such as Huawei and oppo," said Yan.
The company has been beefing up to go higher-end to boost its sales.
In June, the company unveiled Phab2 Pro, the world's first smartphone to host argumented reality applications, and the Moto Z modular series, whose high-powered magnets can allow users to upgrade the handset with additional equipment such as speakers and projectors.
Many analysts, including Xiang, are betting big on Levono's new smartphone products, saying the Moto Z modular series are quite innovative.
But Yan expressed his concerns over the brand. "The brand of Motorola in many places is perceived as old and slow. More efforts has to be done to make its shine again among young people," he said.
