Lenovo logs in 24% slump in revenue, plans job cuts as demand for computers, smartphones weakens

The Lenovo Group reported $15.3 billion in revenue and $437 million in net income in the third quarter (Q3) of FY22-23, which is a 24 per cent decline in revenue as compared to the last quarter, news agency Reuters reported. The company also hinted at the job cuts in future as part of the overall cost reduction.

The world's largest maker of personal computers (PCs) is aiming to reduce its run rate operational expenses by approximately $150 million to achieve a medium-term goal of doubling net margin, its chief financial officer, Wong Wai Ming, said.

"This includes overall reduction in operational spending as well as workforce adjustments where necessary and appropriate," he added.

This is the largest revenue fall which comes after the demand for computers and smartphones is slowing to a forced march post COVID-19 pandemic.

As per the report, the company's pre-tax profits fell by 29 per cent, while net income fell by 32 per cent during the quarter.

The demand has begun to fall and Lenovo's revenue started contracting in the July-September quarter last year.

Lenovo Chief Executive Officer Yang Yuanqing, mentioned in an analyst call, that the entire PC and mobile market experienced a "severe downturn" in the last quarter, and the company was looking to reduce expenses and improve efficiency.

Gartner, an IT research group, predicted last month that PC and smartphone shipments will fall for the second year in a row in 2023. According to Gartner, PC shipments are expected to dip 6.8 per cent this year after plunging 16 per cent in 2022.

Lenovo stated that the market was still processing surplus inventories, which may take another quarter or two. However, Yuan stated that gadget activation statistics proved that genuine demand was not as terrible as it appeared.

Also Read: Elon Musk shuts 2 out of 3 Twitter India offices: Report

Also Read: OYO now biggest hospitality tech platform in Indonesia: CEO Ritesh Agarwal