Chinese Multinational technology company Lenovo is contemplating laying off some parts of its workforce amidst the PC market downturn.
According to the company’s CEO Yang Yuanqing during the third-quarter earnings call, he disclosed that a severe downturn in the PC and smartphone markets, contributed to Lenovo’s revenue declining 24 percent year-over-year to $15.3 billion for the period which ended in December.
The company’s net income plunged further by 32 percent, to $437 million, while its stock price was down 3 percent on Friday. The intelligent Devices group which includes Lenovo’s PCs and smart devices saw revenue decline 34.2 percent year-over-year to $11.8 billion, and operating profit dropped 37.3 percent to $848 million in the third quarter.
Despite this, the company revealed it contributed to leading the industry in market share, profitability, and gross margin, which was 713 percent for the period.
Lenovo CEO Yang still believes that despite the unfriendly sales of PC that have impacted the company, he is optimistic that the PC market might stabilize sooner than many expect.
In his words, “while the PC market still needs some time to digest the inventory to a healthier level, we believe total shipments are likely to stabilize at a higher than pre-pandemic level as early as the second half of the year”.
Meanwhile, Lenovo CFO Wong Wai Ming disclosed that the company is still facing a confluence of global economic challenges and dynamic shifts in market demand. “These factors combined with the IT giant’s hope of doubling its net margin in the next few years, are pushing the company to invest in “high-margin growth engines, and reduce runaway operational expenses by approximately $115 million”, he added.
Investors King understands that the PC market collapsed in 2022 with the worst-ever fourth-quarter decline. Latest data on the PC market revealed that global PC shipments fell 27.8% YoY in the final quarter of 2022 to reach 65.2 million units. Shipments for the full year declined 15% YoY.
The PC market no doubt suffered a downright dismal end to 2022, and analysts predict there could be worse to come in 2023.