May 24th, 2009

Lenovo Group Ltd booked a net loss of US$264 million in the first quarter of 2009 versus net profit of US$140 million in the same period of 2008, due to high restructuring costs and low demand.

Like other global personal-computer (PC) makers, Lenovo also has been affected by the global crisis that has caused consumers to be reluctant to upgrade their PCs. Lenovo and its US rivals, Hewlett-Packard Co and Dell Inc, have restructured in recent months to cut costs.

Lenovo, China’s largest PC maker based on shipments, spent US$116 million on restructuring during that period and at the same time the company’s sales stepped down by 26% to US$2.77 billion.

Besides, the company also booked US$146 million in restructuring cost in that period, chiefly for reductions in its work force, but the company said it has no plan to continue laying off workers.

The company said global crisis has greatly affected worldwide PC market demand as many large enterprises delayed purchase decisions and reduced information-technology budgets. Even the growth of China PC market has slowed down, it said.

But the company still expects Chinese market to remain Lenovo’s main growth driver, because the company has seen significant increase in demand in China since the end of the quarter.