Lenovo Group Ltd shares stumbled Friday after the Chinese technology company posted its first profit decline in three years.
The personal computer maker posted fiscal third-quarter (ended December 31) revenue that fell 24% to $15.3 billion, its largest year-over-year dip in 14 years. Analysts had projected $16.39 billion on average.
Lenovo CEO Yang Yuanqing acknowledged a “severe downturn” in the PC market and said the company must take steps to improve efficiency, which could include slashing its workforce.
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Lenovo shares were down 2.9% to $17.28 Friday morning.
One goal for Yuanqing and chief financial officer Wong Wai Ming is to reduce Lenovo’s run rate operational expenses by approximately $150 million in order to ultimately double net margin.
The company certainly isn’t alone in the tech sector when it comes to potential layoffs.
Both Dell Technologies Inc and HP Inc (NYSE:HPQ) announced recently they will cut staff. Dell plans to eliminate 6,650 jobs, some 5% of its global workforce, and HP plans to cut as many as 6,000 jobs, or about 12% of its global workforce.
That said, Yuanqing expects PC demand to increase again this year.
"From the second half of the year, you will see the PC market resume growth," he said.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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