Lenovo has begun making about 550 job cuts across Europe, after the Beijing-based PC vendor's latest earnings showed its shipment numbers dropped faster than the industry average in every market except China.

Lenovo spokesman Ray Gorman confirmed the layoffs, saying the European action is in line with its worldwide restructuring scheme announced in January. A total of about 2,500 employees will be cut.

The company also responded to its $97m loss in the third quarter by dumping its American CEO William Amelio and reinstating incumbent chairman Yang Yuanging as top chief.

Lenovo wants to shift its focus away from premium brands inherited from its purchase of IBM's PC unit in 2005 to promote low-cost computers and sales in emerging markets such as India, China and Poland. It also plans to shift from a strategy of long-term ties with corporate customers to a larger sales force working with retail channels, according to the Financial Times.

Chairman Liu Chuanzhi told Reuters earlier this week it doesn't expect to return to profitability until 2010 and that acquisitions will be a key part of its strategy to expanding in emerging markets. ®