Lenovo began laying off 235 employees nationwide on Monday, including 165 workers in the Triangle. A majority of those who are losing their jobs are former IBM employees that Lenovo absorbed when it acquired a line of servers from the technology giant.
“We believe that by taking this action today we are creating a more efficient business and one that will be in a much stronger position to compete in what is an increasingly tough market,” said Lenovo spokesman Ray Gorman.
The layoffs are limited to U.S. workers in the company’s enterprise business group, which includes servers and data storage devices and is based in the Triangle. Although a majority of those being let go are former IBM employees, some of the affected workers were employed by Lenovo prior to the company’s $2.1 billion purchase of a line of servers from IBM last fall.
The layoffs amount to less than one-half of a percent of Lenovo’s 60,000 workers worldwide. Lenovo, which is the No. 1 producer of PCs, is based in China but also has a Triangle headquarters.
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The addition of former IBM workers last fall boosted the company’s Triangle workforce by about 1,300 workers. After Monday’s layoffs, Lenovo employs roughly 3,350 workers locally.
The IBM server acquisition was part and parcel of Lenovo’s efforts to diversify into other products in the face of a sluggish market for PCs. Worldwide PC shipments fell 5.2 percent in the first quarter, according to Gartner, as consumers turned to smartphones and tablets.
The IBM deal made Lenovo the No. 3 server company worldwide.
Lenovo has set ambitious growth targets for its server business, but Gorman said that “the results from the enterprise business group have fallen below our expectations. Frankly, we need to get our cost structure down in the short-term in order that we may better position ourselves for long-term growth.”
Gorman noted that “it is certainly not unusual” for a company to institute layoffs following a major acquisition.
In January, Lenovo offered voluntary buyouts to select employees in the U.S., China and Japan. The company didn’t disclose how many Triangle employees accepted those buyouts, but it did say that the company’s Triangle workforce remained unchanged because the departures were offset by new hires.
Gorman said Monday that the company is still hiring workers locally. “Even with this resource action, we have doubled the number of jobs in the Triangle since 2008,” he said.