Amelio's exit catches market by surprise
Market analysts acknowledged yesterday they were more surprised by William Amelio's resignation as chief executive at Lenovo Group than with the mainland computer maker's report of its first net loss in 11 quarters.
Lenovo announced last month that it estimated a material loss in its fiscal third quarter to December as a result of the economic downturn.
Its US$97 million loss in the quarter was on the high side of estimates, but it was not unexpected considering the sales slump in its core market on the mainland and thinning demand in other areas.
Mr Amelio's exit, however, was not anticipated, according to JP Morgan analyst Charles Guo.
Mr Guo said this showed 'the company is not admitting how much cultural differences still exist' between Lenovo's mainland and international operations.
He added that the restructuring the company was currently pursuing - which includes cutting 2,500 staff across its worldwide operations, except the mainland - was an effort to further tighten integration with its overseas operations.
'Although the company mentioned that the decision was made upon the expiration of Amelio's three-year contract, we were generally surprised given the lack of any such public discussion prior to the announcement,' a Deutsche Bank report said yesterday.
Mr Amelio was handpicked to replace Steve Ward as chief executive at Lenovo less than a year after Mr Ward became the first non-Chinese head of the company since it acquired International Business Machines Corp's personal computer operations in 2005.
Before he joined Lenovo, Mr Amelio was a senior vice-president at rival computer maker Dell, where he headed the Asia-Pacific and Japan operations. He also previously worked at IBM.
From all appearances, Mr Amelio fit right in at Lenovo and had a good working relationship with chairman Yang Yuanqing, who now takes over as chief executive.
The two were even named 'Businessmen of the Year' by Forbes Asia magazine last year.
Mr Yang will now depend on an old friend and mentor, Lenovo founder Liu Chuanzhi as chairman, and IBM veteran Rory Read, who is the new president and chief operating officer.
'While we acknowledge Mr Yang's leadership in driving Lenovo to its position in China, and Mr Read's deep experience (23 years at IBM), we view the management of [Lenovo's] complex organisation as a daunting task, and would hope that further multinational hires are made to buttress senior management,' said the Deutsche Bank report.
Mr Yang yesterday said Mr Read's expanded role in Lenovo would be further fleshed out over the coming weeks.
'We view Lenovo as one of the most complex companies among the world's top five computer manufacturers, in terms of geographic coverage and management, particularly since the acquisition of IBM's PC division,' Deutsche Bank said.
