Troubled Lenovo Reports Loss, Appoints New CEO

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Troubled PC maker Lenovo tells investors it plans to focus more on the consumer and SMB markets as it announces a net loss of $97 million (£68 million) for its most recent quarter. CEO William Amelio will leave Lenovo, which has lost market share to rivals HP and Acer amid falling PC shipments.

Lenovo Group announced a net loss of $97 (£68) million for the quarter ended 31st December, down from net income of $172 (£120) million during the same period a year ago. The company cited continuing decreases in worldwide commercial PC shipments. Globally PC shipments dropped 5 percent and in China they dropped 7 percent for Lenovo.

“In the past quarter, same as many other companies, Lenovo was deeply impacted by the global economic turmoil,” says Yang Yuanqing, who is assuming the role of CEO following the resignation of CEO William Amelio, who had come to the end of his three-year contract.

Yuanqing currently serves as chairman of the board, and had served as CEO from 2001 to 2004.

“Over the past three years, we’ve implemented a successful international strategy and Lenovo has joined the ranks of the top global PC companies,” Amelio says in a statement. “Our brand is recognised around the world, we have developed a solid reputation for quality and innovation, and our customer service is second to none. I’m pleased with what we have accomplished as a team.”

Amelio, a former Dell executive, joined Lenovo several months after its 2005 acquisition of the PC business of IBM. This acquisition was viewed by many as the landmark event that created one of China’s first true multinational companies and quickly moved Lenovo into the upper ranks of the global PC industry.

Lenovo also announced that Lenovo founder and board member Liu Chuanzhi has returned as chairman and Rory Read, Lenovo’s senior vice president of operations, has been named to the newly created position of president and chief operating officer.

None of these announcements have come as a surprise. On 8th Jan., Lenovo announced a restructuring program that included laying off approximately 2,500 employees and offered guidance on its dismal earnings.

During the fourth quarter of 2008, Lenovo’s share of global PC unit sales fell to 7.2 percent in 2008 from 7.4 percent in 2007, according to Gartner. Acer’s share in the same period jumped to 11.8 percent from 9.4 percent.

As previously reported by Channel Insider, Lenovo is looking to increase its position with products focused on the growing small and midsize business market. This message was restated 5th Feb. “Lenovo has focused in the international markets on IBM’s products and customers, which are mainly large corporate customers,” Liu says. “But in the current economic crisis, corporate customers have been the most affected. So right now we should emphasise China and emerging markets, and consumer customers.”