Lenovo, Motorola lay off hundreds after Q1 quagmire
East Asian OEM layoffs with global impacts bookend this Thursday. We had news this morning out of Taipei from HTC of a 15 percent cut in workforce, or roughly 2,400 positions. This evening’s news comes from Hong Kong and from Lenovo, where management has decided to eliminate just over 10 percent of its ranks of 60,000. Subsidiary company Motorola will end up taking a loss of 500 jobs, or a quarter of its current workforce.
Lenovo specifically cited challenges facing Motorola in Latin American smartphone markets as well as volatile economic conditions. Costs have ballooned at the parent company to the point where net income year-over-year was sliced by half. First quarter pre-tax income came in 80 percent less than the same period last year.
For Chicago-based Motorola, it’s a different set of numbers we’re looking at, though all of them are just as bad: Q1 phone shipments stood at 5.9 million units, a 31 percent fall-off from last year, even though Q4 numbers from last year were excellent. The cut down to 1,500 employees also represents a 57 percent reduction from when Lenovo acquired Motorola from Google last year.
In a memo to employees from Lenovo CEO Yuanqing Yang, he mentions a restructuring of its mobile operations with China-side operations handling sales while Motorola focuses on design, R&D and manufacturing.
While staff redundancy moves were expected at the time of the acquisition from Google, this came on the heels of some poorly-timed bad news. We’ll see how the conglomerate recovers in the mobile sector.