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By | Austin Modine 19th April 2007 23:51

Lenovo sheds jobs to increase profit

Do these 1,400 employees make me look fat?

Lenovo plans to reduce its global workforce by five per cent, in what the company calls a "resource reduction" of approximately 1,400 jobs in the US and Asia.

Out of the number targeted, 750 positions (including contractors) will be moved into markets closer to Lenovo supplier and manufacturing operations and 650 positions will be cut.

The company will also be integrating its software testing into the company's China operations. The changes are to be implemented within one to twelve months.

Lenovo expects to save approximately $100m in the '07-'08 fiscal year with the restructuring. The majority of that money will be reinvested back into the company. Lenovo also anticipates getting hit with a $50-60m pre-tax restructuring charge, most of it taken in the first fiscal quarter ending June 30.

"We are confident that we are doing the right things to make Lenovo an even stronger, more competitive player in the global PC market," said CEO William Amelio in a statement.

Microsoft and Lenovo are teaming up to build a joint research and development lab in China, AFP reported yesterday. The two companies will split the cost of the facility and share intellectual property developed there.

Lenovo is the third-largest largest PC in the global market, but leads in China and other emerging markets such as India. The company is currently in a neck-and-neck market share race with Acer for its position behind Hewlet-Packard and Dell. ®

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