Lenovo is making another round of job cuts at its Motorola unit, the latest round of cuts at the mobile handset division since buying it from Google in 2014 for about $2.9 billion.
Lenovo officials, responding to news reports about the job cuts, confirmed the layoffs in a statement to journalists, saying they would affect fewer than 2 percent of its 55,000 or so employees worldwide, or about 1,100 workers. They said that the “majority of the positions being eliminated are part of the ongoing strategic integration between Lenovo and its Motorola smartphone business as the company further aligns its organization and streamlines its product portfolio to best compete in the global smartphone market.”
The move comes at a time when the once-hot smartphone space has slowed in recent quarters as the global market matures. IDC analysts in July said that in the second quarter, vendors shipped 343.2 million smartphones worldwide, up. 0.3 percent from the same period in 2015. Compared with the first quarter, the number of units shipped grew 3.1 percent, the analysts said.
Lenovo was not among the top five smartphone vendors on the IDC list, in which three of the top five were from China—Huawei Technologies, Oppo and vivo. Samsung and Apple had the top two spots.
Lenovo officials were optimistic after buying the Motorola Mobility unit from Google, saying in February 2014 that they expected the business to be profitable within six quarters. They saw a chance to rapidly expand the company’s presence in the highly competitive smartphone space.
Last year, the company, which had seen its share of the global mobile phone market slide, reorganized its mobile operations, shifting responsibility for the smartphone business to the Motorola division. Officials at the time said they would use both the Lenovo and Motorola brands to compete in different parts of the market.
At the same time, the company has pared down the Motorola unit. The Chicago Tribune—the Motorola division is headquartered in the Windy City—reported that there were two rounds of layoffs at the unit in 2015.
Lenovo officials also hinted at more restructuring at Motorola when they released Lenovo’s quarterly financial numbers in August. Its Mobile Business Group—which includes both Motorola- and Lenovo-branded mobile phones—saw sales of $1.7 billion, which was essentially flat year-over-year, and lost $206 million. They said in a statement that the business group was streamlining costs and expenses in its “mainstream price bands” while focusing more on innovation at the high end. In addition, Lenovo is working to expand its opportunities in China, they said.
In their statement Sept. 27, Lenovo officials the company’s latest round of layoffs are part of a larger effort to manage costs and become more efficient in order to improve its financial picture. They also said Lenovo is “making adjustments in other areas of the business.”
In addition, they pushed back at speculation that Lenovo could abandon Motorola’s headquarters in Chicago.
“Chicago has a well-deserved reputation for technical excellence and as the hub of our global R&D for our smartphone business,” they said. “We expect to take advantage of local talent to continue developing Moto products there.”