Lenovo’s Chinese founders retake control

PC maker reports losses of $97m

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Lenovo, the world’s fourth-biggest personal computer maker, has replaced its American chief executive with its Chinese chairman, in a surprise move aimed at cutting losses and stopping an erosion of market share.

Yang Yuanqing, who had run the company between 2001 and 2004 and is one of the architects of its development into a global producer, returned as chief executive on Thursday to replace Bill Amelio.

Mr Amelio took over after Lenovo’s acquisition of IBM’s personal computer business three years ago.

Liu Chuanzhi, co-founder of the company that eventually became Lenovo, replaced Mr Yang as chairman.

The reshuffle comes as the company, once celebrated for its seemingly successful acquisition of IBM’s personal computer business in 2005, is increasingly being disadvantaged by its focus on high-end commercial PCs that came with the IBM acquisition.

Lenovo on Thursday reported a $97m net loss for its fiscal third quarter ended December 31, against a $171.75m profit last time. It also said its global PC shipments dropped 5 per cent during the quarter year-on-year, much faster than the 1.7 per cent for the entire industry.

Its global market share dropped to 7.3 per cent from 7.9 per cent in its second quarter.

Nine-month sales were $12.13bn, down from $12.6bn in the same period a year earlier.

“We are impacted more profoundly [by the global economic crisis] than others in the industry,” said Mr Amelio in his last conference call with analysts.

Lenovo said Mr Amelio would stay with the company in an advisory role until September.

The new management said the reshuffle should not be seen as a move to change Lenovo from a multinational back to a Chinese company and pointed to the promotion of former IBM veteran Rory Read, a senior vice-president, to president and chief operating officer.

The company does not plan to relocate its headquarters to China. Mr Yang will continue to be based in Morrisville, North Carolina.

However, Mr Liu said the company would have to rely on China, its home market, and emerging markets to weather the current global downturn.

In a restructuring programme announced last month, under which Lenovo will cut 11 per cent of its workforce, its Chinese operations will be less affected than overseas staff.

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