Lenovo's Q4 sales drop by 24%; will there be layoffs?

Due to the weak demand for personal computers, Lenovo's profit fell for the first time in more than three years, which prompted the company to warn of future layoffs. According to the reports, the company recorded its first quarterly decrease in net income since 2020 as a result of fourth-quarter 2022 revenues decreasing by 24.1% to $15.3 billion. In general, market analysts had estimated $16.4 billion in revenue. The largest PC maker in the world has suffered a decline in sales due to an increase in home-based employment during the Covid-19 outbreak. According to IDC, Lenovo saw a 28% quarterly decline in PC sales globally in the fourth quarter of 2022, along with longtime rivals HP and Dell. [caption id="" align="aligncenter" width="1024"] Image credit- Tech Times[/caption] The CEO of Lenovo, Yang Yuanqing, stated on a conference call on Friday, February 17, that this is the worst time ever for the smart device business. Yang noted that in order to reduce expenses in some areas while increasing manpower in quickly expanding industries like services, the company will need to rearrange its workforce. Also read: Lenovo updates ThinkPad laptops with new CPUs and recycled metals. Yang did not estimate how many positions might be lost, but he did remark that layoffs would only represent a very small portion of the overall operational cost reduction. Beijing-based Lenovo anticipates that the PC market will stabilize earlier this year and, in the interim, will boost productivity and make investments in innovation. These actions caused Lenovo's quarterly net profits to decrease by 32% to $437 million, which was less than expected. [caption id="" align="aligncenter" width="1200"] Image credit- Technology News[/caption] According to Yang, actual demand was much higher than industry shipment figures as evidenced by consumer device activations. He claims that the market is still getting rid of items that were on hand before the epidemic. Evidently, he does not think that the market's demand will be as great as many people think. Nonetheless, Lenovo stock is down more than 4.9% on Friday in Hong Kong, the greatest daily percentage decline in a month. According to Bloomberg analyst Steven Tseng, Lenovo is having a harder time turning a profit as sales are being hit harder by weaker corporate demand and the business is receiving less revenue from attractive services solutions. In the upcoming quarters, electronics companies might benefit from China's strategy to boost consumer spending. The country ultimately lowered its Covid restrictions at the end of last year after receiving numerous complaints.