At the beginning of this fiscal year, at our kickoffs, I shared with you our strategy for the coming year, our mission to transform our company for the next era. In fact, changes in the market and in our competition are coming very quickly, and we must accelerate our transformation across the company.
You can see proof of this in our earnings today. In many areas we delivered solid results. But Lenovo’s goal is to deliver consistent growth in all of our businesses, and we are facing challenges:
- Our core PC business was still strong and we expanded our lead globally, but in a declining market we must continue to become more efficient and reduce expenses so we can make sure this business remains healthy and profitable.
- Meanwhile, in our two newer growth engines – mobile and enterprise – we are clearly still in the process of integrating elements of the acquired businesses and building the right business model, cost structure and competitive foundation.
So, we must be proactive and decisive now, with all of these businesses, so that we can deliver profitable, sustainable growth and achieve our long-term goals. Though very difficult, this action will include a reduction in workforce of about 3,200 people (10% of non-manufacturing headcount and about 5% of our total population of around 60,000 people) around the world. This is part of a broader effort to reduce expenses by about $650m in the second half of this year and about $1.35b on an annual basis. To ensure we return to growth across all of our businesses we will:
- Restructure MBG to align our smartphone development, production and manufacturing and better leverage the complementary strengths of Lenovo and Motorola to quickly drive growth. We will have a much simpler, more streamlined product portfolio with a reduced number of clearly differentiated models. To create a faster, leaner business model, we will leverage our global sales force across Lenovo and we will accelerate the work already well underway to maximize efficiency in our global supply chain.
- Focus and repositioning our Enterprise Business to attack the most relevant and attractive market segments, while increasing overall speed and cost-competitiveness.
- Accelerate our drive for 30% share in PC by better taking advantage of consolidation, while becoming even more efficient and reducing costs to ensure sustainable, profitable growth.
- Drive for greater efficiency across all of Lenovo’s functions. We need to better leverage technology, the internet and innovative approaches in every function to drive our transformation and become faster and more customer-centric.
You will see more communication today from senior leaders and over the next few weeks across the company. All changes will be completed ASAP. We do not make these moves lightly. I know how hard our people work. But we must ensure our long-term success and ability to meet our goals and commitments. We will act with logic and respect, speed and precision, clarity and consistency as we make these changes. When we emerge from this effort, we will be a faster, stronger, better integrated and aligned global company.
Chairman & CEO