Layoff Watch Is On At Lenovo After Huge Drop In Global PC Sales

RESEARCH TRIANGLE PARK. Worldwide PC sales are expected to decline at the end of 2022, and Dell announced this week that it will cut about 5% of its workforce, or about 6,500 jobs. Last November, HP, the second member of the top three PC makers, announced thousands of job cuts. Lenovo, the world's largest computer vendor that operates a large campus in Morrisville, is next.

A spokesperson for the company told WRL Techwire that it has "good potential for further growth."

Lenovo, which has two headquarters in Beijing and Morrisville, confirmed in a statement sent to WRAL Techwire in December that the company laid off some employees in December. But it denied that the round of layoffs was as close to 10% of its workforce as the report suggested.

If Lenovo manages to avoid further cuts, the main reason may be the diversification of its product line. In its financial report last November, the tech conglomerate said PCs accounted for just over 60 percent of its revenue base, which was founded several years ago by chairman and CEO Yang Yuanqing. (A year ago, the PC-based business accounted for about 80% of revenue, Lenovo reported).

After acquiring Motorola's smartphone business and IBM's low-cost server group in 2014, Ian decided to invest in the growing IoT smart device market and then the services industry. Ian is committed to actively increasing Lenovo's investment in research and development. However, he emphasized that computers will remain Lenovo's bread and butter.

Now the big question is, will the non-computer business continue to grow?

Lenovo, which became a computer and technology giant after acquiring IBM's business in 2005, will report quarterly earnings later this month.

PC sales are 'in decline', but Lenovo remains on top

The effects of declining PC sales

A Gartner report published as far back as January 2023 showed that Lenovo's shipments fell nearly 29% to 15.6 million units shipped worldwide in the fourth quarter.

However, Dell's computer shipments fell by 37%. Dell cited a "difficult global economic environment" for the job cuts this week.

In a letter sent to all Dell employees, the company's vice president, Jeff Clarke, described the steps the company had already taken, but then said those steps were not enough.

"We know that market conditions continue to deteriorate with an uncertain future," Clarke wrote. "The steps we took to get ahead of the recession, which enabled several strong quarters in a row, are no longer enough. We must now make additional decisions to prepare for the next steps."

However, Lenovo is optimistic.

A Lenovo spokesperson told WRL TechWire that "while the PC market is clearly under pressure, all industries go through cycles, and in the long term we expect the market to return to pre-pandemic levels."

The spokesperson did not want to comment on the reductions that have already taken place in December, or whether reductions are being discussed this month or could happen.

"At Lenovo, we've diversified our growth engines as part of a massive transformation over the past few years, which means we're well-positioned for continued growth in many areas, including servers, storage, solutions and services," Lenovo said. representative of . representative.