PC giant to axe 2,500 staff in revamp as global slump bites Hammered by a global slowdown that has affected personal computer sales, Lenovo Group aims to shed 2,500 staff worldwide, cut executive pay up to 50 per cent and revamp operations in Asia as the company forecasts its first loss in 11 quarters. News of the mainland technology giant's retrenchment plan and profit warning, combined with some gloomy corporate results and sell-offs of bank shares, sent the Hang Seng Index tumbling 3.81 per cent to 14,415.91 points yesterday. Lenovo's share price plunged 25.97 per cent to close at HK$1.91 when trading resumed after being suspended a day earlier. When its latest restructuring is completed at the end of this quarter, the world's fourth-largest personal computer supplier is expected to achieve savings of US$300 million in the fiscal year to March 2010 and incur a pre-tax restructuring charge of about US$150 million this fiscal year. 'We are taking these actions now to ensure that in an uncertain economy, our business operates as efficiently and effectively as possible, and continues to grow in the future,' said chairman Yang Yuanqing. Analysts, however, said there was more room for improvement. JP Morgan analyst Charles Guo said operating expenses for Lenovo could swell in a prolonged downturn as it continued to run and expand its factories instead of cutting back production and outsourcing. Dell, the world's No2 personal computer vendor, yesterday confirmed it would axe 1,900 staff at its 18-year-old plant in Limerick, Ireland, as more production moves to Poland. Joseph Ho, an analyst at Daiwa Institute of Research, said: 'Lenovo still lags behind competitors in building the channel infrastructure to support its international consumer personal computer business.' On the job cuts affecting 11 per cent of Lenovo's workforce, United States-based spokesman Ray Gorman said these did not cover operations on the mainland. Lenovo, which acquired International Business Machines Corp's personal computer business in 2005, had already booked a restructuring charge of US$24 million in its fiscal second quarter to September last year, when about 50 staff were laid off in the US. 'Although the integration of the IBM personal computer business for the past three years was a success, our last quarter's performance did not meet our expectations,' Mr Yang said. Lenovo reported worse than expected results in its fiscal second quarter to September, when net profit sank 77.73 per cent to US$23.44 million from US$105.26 million a year ago because of slumping corporate demand for personal computers worldwide and a softening in its core mainland market. Based on estimates from unaudited financial information, the company said it was likely to record 'a material loss' for the quarter to December 'due to the unprecedented global economic challenges facing the world' which had created less demand for personal computers and related products. The restructuring, which Lenovo described as a 'resource redeployment plan', will consolidate its mainland and Asia-Pacific organisations into a single business unit covering the Asia-Pacific and Russia, headed by Chen Shaopeng, its president for Greater China. Call centre operations in Toronto, Canada, will be relocated to Morrisville, North Carolina, the company's main site in North America. Lenovo will cut executive compensation by 30 to 50 per cent, including merit pay and long-term incentives, and any performance payments for the coming year. Expenditures will be trimmed in support and staff functions, such as finance, human resources and marketing. Three senior vice-presidents - David Miller and Steve Petracca, both Dell veterans, and Scott DiValerio, who joined from Microsoft Corp - will leave the company.