Caixin
Sep 28, 2016 06:31 PM
BUSINESS & TECH

Lenovo Slashes 1,000 Jobs at Motorola

Photo: Visual China
Photo: Visual China

(Beijing) — Lenovo Group Ltd. has laid off about 1,000 employees at its Motorola unit, slashing more than half of the smartphone maker's workforce, after failing to revive the brand as part of a strategy to compete with top-tier names like Apple and Samsung.

The world's largest PC maker said in a statement that the Motorola cuts amount to less than 2 percent of its approximately 55,000 employees globally. But the layoffs took a much bigger toll on Motorola itself, accounting for half or more of its entire workforce, according to the news website Droid Life.

Lenovo has been trying to diversify into smartphones as sales growth for its older desktop PCs and laptops slows and even declines. The company's low-end Lenovo brand phones boomed initially, but their sales have dived recently due to stiff competition and a lack of loyalty from consumers.

Lenovo was placing bigger hopes on Motorola Mobility when it purchased the company two years ago from Google for $2.9 billion, aiming to move up the value chain into higher-margin, more-expensive phones. But its efforts to revive the storied brand have largely failed.

Lenovo said the majority of positions being eliminated in the latest cuts are part of an ongoing strategic integration between the Lenovo and Motorola businesses as Lenovo streamlines its product portfolio to become more competitive in the global smartphone market, according to the statement.

Once a staple in China and around the world, Chicago-based Motorola gradually faded as it failed to keep pace with smartphone technology over the last five years. Lenovo bought the company from Google in 2014 but has faced an uphill battle in restoring the brand to its former glory.

The latest layoffs are part of a broader restructuring of Lenovo's mobile business announced earlier this year, said Yan Zhanmeng, director of technology research firm Counterpoint Technology Market Research. The smartphone maker has struggled to make a comeback in the Chinese market because most of its suppliers and research team are based outside China, which inevitability raise its costs, Yan added.

Lenovo said its smartphone business "did not meet expectations" in its latest fiscal year, as the entire company posted a net loss of $128 million and phone shipments in China declined 85 percent from a year earlier, according to the company's financial report for its fiscal year that ended on March 31.

Contact reporter Chen Na (nachen@caixin.com); editor Doug Young (dougyoung@caixin.com)

You've accessed an article available only to subscribers
VIEW OPTIONS
Share this article
Open WeChat and scan the QR code