Lenovo hands over the smartphone controls to Motorola after profits dive

Moto X Pure Edition

Lenovo is planning to trim around 3,200 jobs from its global workforce after a big drop off in profits for the opening quarter.

In the first quarter of the fiscal year 2015, Lenovo oversaw a net profit drop of 51% to $105 million (around £67 million or AU$143 million) and the firm cited "severe challenges in its main markets" as one of the major contributing factors to the decline.

Alongside the job losses, which represents around 5% of its total workforce of 60,000, it is completely restructuring its mobile arm to leverage the strengths of Motorola, which basically equates to Motorola taking over responsibility for the design, development and manufacturing of smartphones.

In terms of savings, Lenovo hopes the job losses will reduce its expenses by around $650 million (around £415 million, or AU$885 million) in the second half of the year. However, the reduction of overhead costs could be completely offset by the smartphone restructuring, which could ding Lenovo for as much as $600 million (around £383 million, or AU$817 million).

Revenues up

Lenovo plundered some $2.9 billion (around £1.86 billion, or AU$3.95 billion) to acquire Motorola from Google just last year and by leading the smartphone unit its hoped that the pre-tax loss of $292 million (around £186 million, or AU$397 million) in Q1 for its mobile arm will start to turn for the better in the near future.

Even among all the doom and gloom, Lenovo was still able to post a 3% increase in revenue to $10.7 billion (around £6.85 billion, or AU$14.5 billion) and it remains atop the PC market with a 20.6% share of the global market and 13% of the US computing pie.