Lenovo Announces Restructuring Plan

The computer maker's reorganization will include about 1,000 layoffs and seeks to streamline its global marketing and sales.

Computer maker Lenovo Group, which last year vaulted onto the international scene with its $1.7 billion purchase of IBMs PC business, is enacting a reorganization that includes streamlining its global marketing and sales and consolidating operations such as manufacturing and research and development.

The plan will include about 1,000 layoffs, reducing its workforce of 21,400 by about 5 percent.

However, it is designed to make the company more approachable to its customers and thus position it better in the highly competitive PC business, said William Amelio, Lenovos CEO.

"These steps position Lenovo as a more effective global competitor while supporting our commitment to lead in innovation and customer satisfaction," Amelio said in a prepared statement.

The changes, Lenovo said, will save it about $250 million annually, while allowing it to dedicate more resources to some operating.

It will take six months to a year to complete. Lenovo expects to take a restructuring charge of about $100 million in its fiscal fourth quarter, which ends March 31.

"We want Lenovo to deliver profitable growth everywhere we do business. The plan we are announcing today helps us achieve that, positioning Lenovo to pursue growth aggressively in both the relationship and transaction customer segments and delivering a cost structure that better reflects the realities of todays highly competitive global PC industry," Amelio said.

Lenovo brought Amelio, who is considered to be an operations expert, in to do just that.

/zimages/3/28571.gifClick here to read more about Lenovos CEO switch.

Thus, as part of its plan, Lenovo will consolidate several functions in an effort to create a greater focus on its customers, after he said to analysts that those customers told him Lenovo was difficult to interact with.

The plan creates new teams that pair sales and support personnel, analysts said.

Regional department heads will report directly to Amelio, removing a layer.

The company will also forge a tighter relationship with IBM Global Services, the analysts said.

Lenovo will thus integrate its sales, service, support and fulfillment units throughout the Americas, Europe, the Middle East and Asia to give customers a single point of contact for the company.

Not unlike moves by its rival, Hewlett-Packard, last year, Lenovo officials said they wanted to cut layers in the sales units and give company representatives closer to the customer greater autonomy and decision-making abilities in hopes of creating a more responsive and customer-friendly structure.

Next Page: Changes and consolidations.