April 19, 2007 9:39 AM PDT

Lenovo announces operational shake-up

Lenovo has announced an internal restructuring of the company's operations to boost its efficiency in an increasingly competitive PC market.

Included in the restructuring, Lenovo said in a statement Thursday, is a "resource reduction" of 1,400 Lenovo workers and contractors worldwide, to be completed primarily within the next 12 months. Slightly more than half of these "reductions," however, will be in the form of transfers to emerging markets, so the total job loss will be closer to 650.

Additionally, Lenovo has set goals to better organize its investments and resources, as well as streamline its supply chain and sales and marketing divisions. Software testing will now be integrated into its China-based facilities.

Internal restructuring isn't Lenovo's only strategic move these days. Earlier this week, the China-based PC manufacturer, which acquired IBM's ThinkPad division in 2005, announced a deal with Microsoft in which the two would collaborate on a Beijing-based research and development lab. The facility will focus on mobile technology and products built for Microsoft's software.

With its newly announced efficiency measures, Lenovo said it hopes to save approximately $100 million over the course of the 2007-2008 fiscal year, and to reinvest most of those savings in internal strategic initiatives. The company will, however, also need to fork over a pretax restructuring charge of about $50 million to $60 million in this fiscal quarter.

Lenovo currently retains its No. 3 spot in the worldwide PC market, behind Dell and fast-growing Hewlett-Packard, but it is dangerously close to being knocked out of the top three by Acer.

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