Computer Maker Lenovo Posts Large Loss
January 8th, 2009 at 5:26 am - by admin
Chinese Lenovo Group Ltd. announced this morning in Hong Kong that it would be forced to post a loss for Q4 of 2008, for the first time in almost nine years.
Lenovo blamed the losses and failure to retain profit on a reduction in demand caused by a global recession, and globally reduced demand for more expensive consumer electronics - such as computers.
Lenovo also announced that it would be cutting 11 per cent of it’s workforce, an estimated savings of $300 million per year in response to reduced economic conditions.
The largest computer manufacturer in China saw share prices fall over 15 per cent, consistent with a 2 per cent loss in the Hang Seng Index, trading was suspended shortly after the announcement and will resume again Thursday.
This is consistent with other electronics and computer manufacturers, Intel posted a 23 per cent below-estimates profit margin for Q4 and a number of other companies are expected to post losses in the next weeks.
January 9, 2009 at 6:26 PM
I guess what this demonstrates is that companies which are otherwise profitable and viable are in for a challenging period ahead, particularly those whose products and/or services are not absolute essentials.
In this environment, I would imagine that both consumers and corporations alike would be looking to cutback on IT expenditure wherever possible, and that both will delay necessary PC upgrades if possible for the time being.
One of the key factors for survival over the next few years will be a strong balance sheet. All firms within the electronics industry are in for challenging times, and only those with a solid foundation, including a strong balance sheet, will survive.