Lenovo to drop 3,200 jobs, due to fall in revenue of 80%

[RealBlackStuff]

Lenovo pre-tax income drops 80 percent with 3,200 jobs to go
As a result of 'severe challenges', Lenovo has said that it cut approximately 5 percent of its global workforce after a massive drop in its net income.

Is this going to endanger the Retro-project?
Or is the Retro-project the result of this?

Read more here: http://www.zdnet.com/article/lenovo-pre ... obs-to-go/

[Ibthink]

Topic moved to the General News forum, as this really has nothing to do with the Retro project.

As far as what I have read regarding the job-cuts, these are all in the smartphone business. In the future, all Lenovo smartphones will be developed by Motorola.

The "severe challenges" mentioned are mostly in the smartphone market, especially in China with Xiaomi, where Lenovo really struggles to be successful against strong competition. The PC business is not the cause of this income drop, as they have in fact even gained shares in the PC market (but the market as a whole is failing, so in result, even with higher shares, they end up selling less in a shrinking market).

[ajkula66]

The PC business is not the cause of this income drop, as they have in fact even gained shares in the PC market (but the market as a whole is failing, so in result, even with higher shares, they end up selling less in a shrinking market).

Huh?

From the article, emphasis mine:

Lenovo's PC group shipped 13.5 million PCs during the first quarter, a decline of 7 percent year on year, with the company saying it performed better than the overall market, which declined by 12 percent, and gained market share in every geography.

and

its mobile group increased sales by 33 percent to $2.1 billion, with $1.2 billion coming as a result of its Motorola acquisition.

For tablets, the company shipped 2.5 million units, a jump of 5.6 percent.

So no, it's not the phone/tablet market and/or sales that is pulling them down...

[Dekks]

So no, it's not the phone/tablet market and/or sales that is pulling them down...

I would be interesting to see what profit Android is for Lenovo, as it's believed that bar Samsung no one makes a profit from Android. Players like Sony & HTC are getting crushed and it's likely they will exit smartphones.

[laowai]

explains why they did the retro survey. it seems as if maybe, just maybe, they are slowly figuring out that if they copy apple like everyone else is doing... all it does is makes them compete with those $300 craptops. loss of premium. dont get me wrong, it's still there, that's why they declined less than the market as a whole, but it's not out nutkicking and curbstomping the competition like it used to.

[Ibthink]

So no, it's not the phone/tablet market and/or sales that is pulling them down...

Ah, really? I guess its all a direct result of the move to 6 row keyboards...

http://www.notebookcheck.net/Lenovo-201 ... 866.0.html

"Nonetheless, the PC segment made a profit of $368 million before accounting for taxes."

As I already mentioned, yes, they are loosing sales in the PC segment. As everyone. Lenovo is loosing sales slower than most other manufacturers however (the PC market: - 12.8 %, Lenovo: - 7.1 %). So their market share actually increased.

"Lenovo's mobile sector saw revenues increase by 33 percent to $2.114 billion, which can be attributed to strong performance outside of China."

If you take a look at the presentation slides there, you can see where the real weakness comes from: The Chinese smartphone market.

And thats also the reason why they are restructuring their smartphone business now. The PC business won´t be restructured, because it actually does well. Take a look at this slide:
http://www.notebookcheck.net/fileadmin/ ... PPT_21.jpg

The Mobile unit was responsible for a loss of 292 million $. I guess this is totally the PC units fault....and especially ThinkPads!

explains why they did the retro survey. it seems as if maybe, just maybe, they are slowly figuring out that if they copy apple like everyone else is doing... all it does is makes them compete with those $300 craptops. loss of premium. dont get me wrong, it's still there, that's why they declined less than the market as a whole, but it's not out nutkicking and curbstomping the competition like it used to.

The Retro survey has nothing to do with these losses.

[lophiomys]

Here is the link to the original press release by Lenovo, read with caution:
http://www.lenovo.com/ww/lenovo/pdf/Len ... final).pdf

Lenovo missed a big opportunity making profits by destroying the Thinkpad brand, and not offering any more the trusted features many people were willing to pay good money for.

Even thoug the overall PC marked might be stagnating, in my limited view of the world, I do see many people buying expensive computers from Apple and being happy with it.
I have not seen one, who bought a Lenovo, except for the friends I prepped a good old Classic Thinkpad from IBM(/Lenovo) ages.
Apple makes exceptional profits, Lenovo NOT.

And there are other reasons, why customers might shy away from Lenovo:
http://www.theregister.co.uk/2015/08/12 ... are_nasty/

Lenovo should just get its things straight again,
offer some Classic Thinkpads with workhorse qualites and without Spyware, and with fully supported Linux ....
then money will find its way to them again.

[fb1996]

Even thoug the overall PC marked might be stagnating, in my limited view of the world, I do see many people buying expensive computers from Apple and being happy with it.
I have not seen one, who bought a Lenovo, except for the friends I prepped a good old Classic Thinkpad from IBM(/Lenovo) ages.

...most ThinkPads are bought by companies, not private customers.

offer some Classic Thinkpads [...] without Spyware

Did you read the statement by Lenovo?

Think-brand PCs are unaffected.

[lophiomys]

Even thoug the overall PC marked might be stagnating, in my limited view of the world, I do see many people buying expensive computers from Apple and being happy with it.
I have not seen one, who bought a Lenovo, except for the friends I prepped a good old Classic Thinkpad from IBM(/Lenovo) ages.

...most ThinkPads are bought by companies, not private customers.

Still my observation is that developers and members of big corporations, whom I meet a conferences, do not wear Lenovo anymore. It is a limited picture of the world (as I wrote before), but quite a good indication. So please name a few companies, which bought Lenovos in big numbers, which would back up your theory of profits.

The other aspect is, that we are looking at most probably cooked numbers by Lenovo management. I suspect that the real numbers are even worse. Firing 3200 employees (approx 5% (?)) is a good indication for that.

offer some Classic Thinkpads [...] without Spyware

Did you read the statement by Lenovo?

Think-brand PCs are unaffected.

Yes I did read a similar statement elsewhere.
But it is irrelevant: Why are Think-products not affected? By Chance?

Jesus Christ, this reveals the mindset of Lenovo's management.
What guarantee do we have that such security-leaking SpyWare-Rootkit will not be included in the next generation of Think-products?

It is hard enough to maneuver around the security leaks of crappy Windows and other software and on top of those hassles,
the customers have to check now, if Lenovo would endanger their precious data from the BIOS!

[theterminator93]

So please name a few companies, which bought Lenovos in big numbers, which would back up your theory of profits.

An example of a company that buys them here in the US is Sherwin Williams. Just in the Cleveland area there have been hundreds upon hundreds of T61s, T410s and T420s cycled out of service and donated to local nonprofits.

[pianowizard]

As I already mentioned, yes, they are loosing sales in the PC segment. As everyone. Lenovo is loosing sales slower than most other manufacturers however (the PC market: - 12.8 %, Lenovo: - 7.1 %). So their market share actually increased.

Market share in terms of the number of PCs shipped. That's much less important than the actual profit. Lenovo reduced profit margins to gain its market share.

Remember a decade ago, when Dell was the world's #1 PC maker? Again, that's in terms of the number of computers shipped, and Dell achieved that #1 spot by selling el cheapo computers at small profit margins. This strategy helped Dell for several years but ultimately backfired as customers eventually shunned its unreliable products. Later, Acer tried the same approach and went through the same rapid rise and subsequent rapid fall. Looks like Lenovo is the third victim of this approach.

After getting burned by this short-sighted strategy, both Dell and Acer worked hard to make better products, to try to regain their reputation and increase profit margins. The "Retro Thinkpad" project suggests that Lenovo is trying to do the same.

It's interesting that history repeated itself so many times.

[RealBlackStuff]

The Retro survey has nothing to do with these losses.

So why do you keep insisting that this Retro-stuff has nothing to do with it?
Lenovo fell overall in world ranking from 2nd place (2014) to 6th place (2015).
Methinks the Thinkpad makers did NOT think...
Until they got kicked so hard in the butt by their increasing losses, that some designer had to come up with the Retro-project idea!
After all, it's the same designer (Mr. D. Hill) that caused all the problems in the first place!

Beating around the bush by trying to blame the mobile section does not impress me (and others)...

[Ibthink]

So why do you keep insisting that this Retro-stuff has nothing to do with it?

Well, maybe, because I know the origins of the Retro project? And that this projects wasn't a Lenovo initiative to begin with, but one brought up by my good friend lead_org? And that there were many people inside Lenovo who didn't like this idea and fought against it?

It angers me to see that this great initiative, for which was fought for many months, is now seen in such a false light. This retro machine won't be even a part of Lenovos regular lineup, and might not even be sold to businesses. This is a machine solely for the fans

Lenovo fell overall in world ranking from 2nd place (2014) to 6th place (2015).

World ranking? Which "world ranking"? What do you even mean by that?

When it comes to PCs, Lenovo is still #1.

After all, it's the same designer (Mr. D. Hill) that caused all the problems in the first place!

Nope. Not even close to the truth. David Hill is personally responsible for preserving many things. Without him, things would look very bleak....just ask lead_org. He spoke with David personally.

Beating around the bush by trying to blame the mobile section does not impress me (and others)...

Believe what you want to believe. All you have is conspiracy and no real evidence. The sales numbers released by Lenovo do speak against you. And what reason would they even have to lie about that?

The "Retro Thinkpad" project suggests that Lenovo is trying to do the same.

Maybe the new P series does, as their prices are much higher than other ThinkPads and they include many features of older ThinkPad. But the Retro project certainly does not.

The other aspect is, that we are looking at most probably cooked numbers by Lenovo management

So, you are suggesting that they would fake their numbers? You know that that's a crime and that Lenovo has shareholders who would probably scream very loud if Lenovo would do that?

This is really getting ridiculous...

[RealBlackStuff]

When it comes to PCs, Lenovo is still #1.

That may be so, but in laptops (which is all we care about on this forum) they're currently nowhere near the top.
That's where they fell from rank #2 to rank #6.
http://blog.laptopmag.com/laptop-brand-ratings

You can defend the Retro-project all you want, but it's only coming alive due to dropping sales which are due to bad design!

[fb1996]

That may be so, but in laptops (which is all we care about on this forum) they're currently nowhere near the top.
That's where they fell from rank #2 to rank #6.
http://blog.laptopmag.com/laptop-brand-ratings

...do you think they fell from 2nd to 6th place mainly because of the design of the ThinkPads?

The brand’s consumer laptops were preloaded with adware that left users open to security attacks, although the company has since apologized and removed the offending software. But that’s not the only issue. In our undercover testing, Lenovo’s tech support was subpar. Plus, the review ratings haven’t been as strong as in years past, and the quality of the company’s keyboards and touchpads has been mixed. All that added up to Lenovo falling from an excellent second place last year to sixth in this year’s Best and Worst Brands survey.

http://blog.laptopmag.com/lenovo-brand-rating

it's only coming alive due to dropping sales which are due to bad design!

...do you know the origins of this project or is that just a vague suspicion?

[ajkula66]

Ah, really? I guess its all a direct result of the move to 6 row keyboards...

First and foremost, how about you stop putting words in my mouth, and I mean NOW?

Secondly, let's give a full quote and not pick and choose:

Lenovo's mobile sector saw revenues increase by 33 percent to $2.114 billion, which can be attributed to strong performance outside of China. The manufacturer managed to ship 16.2 million smartphones and 2.5 million tablets during the quarter.

The Mobile unit was responsible for a loss of 292 million $. I guess this is totally the PC units fault....and especially ThinkPads!

Compare the two quotes which originate in the same article...

So why do you keep insisting that this Retro-stuff has nothing to do with it?

Well, maybe, because I know the origins of the Retro project? And that this projects wasn't a Lenovo initiative to begin with, but one brought up by my good friend lead_org? And that there were many people inside Lenovo who didn't like this idea and fought against it?

It angers me to see that this great initiative, for which was fought for many months, is now seen in such a false light. This retro machine won't be even a part of Lenovos regular lineup, and might not even be sold to businesses. This is a machine solely for the fans

Well...

The original initiative and the machine that we'll never get to see would've been the one for the fans. What we have coming now seems to be a quick cashing out on the nostalgia and despair of the old-school ThinkPadders.

So, you are suggesting that they would fake their numbers? You know that that's a crime and that Lenovo has shareholders who would probably scream very loud if Lenovo would do that?

This is really getting ridiculous...

Corporations get "creative" with numbers all of the time, and it only becomes a crime if/when they get caught. What works for Lenovo is the fact that the only ones who could actually prove the creativity in their numbers - or lack thereof - also happen to be their single biggest shareholder, as in Chinese government.

it's only coming alive due to dropping sales which are due to bad design!

...do you know the origins of this project or is that just a vague suspicion?

I'm not going to speak for RBS, but for many of us here it's a matter of common sense and not vague suspicion.

[bit_twiddler]

Unfortunately, price erosion of the hardware is to blame:

http://www.theguardian.com/technology/2 ... -asus-acer

Set against that backdrop, 7 row keyboards are probably not a significant factor.
Business notebooks and workstations are probably just a tiny percentage of the market.
Lenovo's strategy seems to be to wind up as the "last man standing" in PCs.

We can only hope that they succeed, or there will be no "retro" laptops. Yes, those
dweeby consumers you meet at Starbucks with their Yogas designed by Ashton Kutcher
are going to make or break Lenovo. I suggest that you complement them on their
purchases before they ride off into the sunset on their designer skateboards.

Only Apple (and, to a smaller extent, Dell) have successfully adapted their business
models. It would be interesting to know what the profit margin is on workstations
and business PCs, since that's what most people in this group tend to buy.

[lophiomys]

I do understand that a crappy cheap laptop or PC running a troublesome error-prone OS would not attract more buyers,
or would not make good prices on the market. Apple is the counter example and proof.

"Ferocious competition" on the PC market is what we customers want, no pity with innovation lacking big corporations.

I think, that after the finance crisis has passed after another decade, and people have realized that their flashy tablets and smartphones are not that useful in practice, the PC and laptop business will pick-up again.

Besides that there is always a good opportunity to earn with some square deals, by offering good quality in hard- AND software (e.g. Linux),
e.g. the gamer laptops by MSI took me by surprise recently, those would be perfectly fine for work too,
or a Classic Thinkpad model line from 12 to 15inch would certainly appeal to professionals for a good profit margin (plus some substantial advertisement value).

Just my 2 cents.

[jdrou]

So please name a few companies, which bought Lenovos in big numbers, which would back up your theory of profits.

An example of a company that buys them here in the US is Sherwin Williams. Just in the Cleveland area there have been hundreds upon hundreds of T61s, T410s and T420s cycled out of service and donated to local nonprofits.

EMC's field service people all seem to carry Thinkpads as well.

Secondly, let's give a full quote and not pick and choose:

Lenovo's mobile sector saw revenues increase by 33 percent to $2.114 billion, which can be attributed to strong performance outside of China. The manufacturer managed to ship 16.2 million smartphones and 2.5 million tablets during the quarter.

The Mobile unit was responsible for a loss of 292 million $. I guess this is totally the PC units fault....and especially ThinkPads!

Compare the two quotes which originate in the same article...

Increased revenue does not contradict reduced (or negative) profits. See pianowizard's comments about reducing profit margins to increase unit sales. The implication is that they sold a lot of low-margin mobile devices outside China so not enough profit to offset their losses in the China market.

[Temetka]

Here I thought it was just their mobile divisions they were gutting. Meaning cell phones and tablets.

As far as the retro project is concerned, I sincerely hope it takes off. Otherwise I am going to have buy a ton of T410's on e-bay to ensure I have a functional classic laptop for years to come seeing as how CPU's have pretty much peaked any my machine runs the heck out of linux.

As far as theories of cooking the books, internal Lenovo mgmt. shakeups/downs, I don't have enough knowledge of their internal operations to comment on that. But I do have this to say:

Long live the Classic T-Series! Best laptops in the world IMO.

[Puppy]

Lenovo Q2 net loss $714 mn; India helps boost revenue by 16%
http://www.msn.com/en-in/news/other/len ... ar-BBmUUWz

[Summilux]

Let's see in which direction they're going to pivot; if they're sink even more in their cheapskate game or if it'll down upon them that going upmarket and listening to their userbase sincerely instead of having a selective hearing could land them into a better position.