President Amelio is restructuring the computing company in response to weak sales. Chairman Yang Yuanqing had expressed disappointment at the results and blamed both the global slowdown and management problems.

“We had our own execution issues. The rollout of new products, control of gross margins and the progress of the strategic plan fell short of our expectations,” Yang said in a conference call with reporters.

Yang said Lenovo would make “extensive changes” to cut costs, improve efficiency and speed up expansion in faster-growing emerging markets.

President and CEO William J. Amelio said the restructuring might include job cuts but no details were decided. He said it would cost $75 million to $100 million, including a $24 million charge recorded in the past quarter.

“We will be looking at anything and everything that will make us more efficient,” Amelio said. “The team is working hard to reduce expenses dramatically.”

Amelio said Lenovo would look at possible acquisitions that might increase economies of scale, improve profitability or acquire new technology.

The results were a sharp turnabout for Lenovo, which had been reporting double-digit annual increases in sales and profits following its acquisition of IBM Corp.s personal computer unit in 2005.

Yang said Lenovo was especially hard-hit by a slowdown that began earlier this year in corporate spending, which accounts for a large share of its business. He said tougher market conditions were expected to continue for several more quarters.

Sales in Greater China – which includes Hong Kong and Taiwan – rose 11 percent to $1.9 billion, the company said. But elsewhere, shipments in the Americas were off 4 percent and in the Asia-Pacific outside China down 10 percent.

Amelio said Lenovo will “stay the course” and tried to reassure investors that its strategy is “solid and fundamentally strong.” The company said its cash reserves are a healthy $1.5 billion.

“We believe we will become a stronger player by investing in growth during the downturn,” said Wong Wai Ming, the companys chief financial officer. “We believe Lenovo is well-positioned to capture opportunities in high-growth emerging markets.”

On the Net:

Lenovo Group: http://www.lenovo.com.cn

Source: cagra