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3/16/2006
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Lenovo To Lay Off 1,000 In Restructuring

Over the next 12 months, corporate operations will be moved from Purchase, N.Y., to Raleigh, N.C., and desktop operations will go to China.

Lenovo on Thursday said it’s undergoing a restructuring that calls for the layoff of 1,000 employees and corporate operations to be moved from Purchase, N.Y., to Raleigh, N.C.

In addition, Lenovo will move its desktop operations to China and take a restructuring charge of $100 million. The company said in a statement that the moves to Raleigh and China are designed to make its global supply chain and operations more efficient. The restructuring is expected to take six to 12 months.

"The resource reductions that are part of this plan are, without question, the most difficult part of our program,” Lenovo CEO William Amelio said in the statement. “We have thoroughly examined Lenovo's competitive position, and it's clear that for the future of the company, we have to take these actions."

Lenovo completed its acquisition of the former IBM PC business last May and has said publicly that the integration went much smoother than anticipated. Still, in Lenovo’s last earnings announcement, company executives acknowledged that the PC maker encountered more difficulties than expected in growth and profitability.

And even after the IBM acquisition, Lenovo remained one of the more far-flung, least-centralized companies in the industry. Its headquarters were in Purchase, N.Y., and it has key R&D facilities in Raleigh and major operations in China, including its financial operations in Hong Kong, where it trades on the local stock exchange.

The restructuring announcement was made toward the end of a week in which Lenovo unveiled a new partner program that kicked free of much of IBM's legacy model. Also this month, Lenovo formally launched its first Lenovo-branded product line in the United States. Amelio said in the statement that Lenovo will remain focused on growing in emerging markets and the small- and midsize-business space.

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