Lenovo Layoffs: 500 Job Cuts Impact Data Center Group, Other Units

'While these actions aren’t easy, they are necessary as we continue to execute our strategy for Intelligent Transformation while achieving sustainable, profitable growth,' a Lenovo spokesperson tells CRN of the layoffs, which are impacting the company's U.S. headquarters.

Lenovo confirmed that it is laying off roughly 500 employees — a move that will impact its Data Center Group and other business units as the Hong Kong-based company achieves record revenues.

A Lenovo spokesperson said in a statement to CRN on Wednesday, saying that the company began notifying employees the day before. The job cuts are affecting positions across multiple business units, functions and geographies, including Lenovo's U.S. headquarters in Morrisville, N.C.

[Related: Lenovo's Kevin Hooper: Our Vision Is To Be The ‘Most Trusted Data Center Partner In The Industry’]

"Lenovo took a global resource action yesterday impacting approximately 500 positions. With this action, we now have approximately 5,000 employees in the U.S. and 57,000 globally," the spokesperson said. "While these actions aren’t easy, they are necessary as we continue to execute our strategy for Intelligent Transformation while achieving sustainable, profitable growth."

A spokesperson for the North Carolina Department of Commerce said the agency has not received a WARN notice from Lenovo. The U.S. WARN Act, or Worker Adjustment and Retraining Notification Act, requires employers to send a 60-day notice before 50 or more employees are terminated in a 30-day period from a specific facility.

Yang Yuanqing, CEO and chairman of Lenovo, invoked the phrase "Intelligent Transformation" in a recent statement after the company posted record annual revenue of $51 billion for the 2019 fiscal year, a 12.5 percent increase from the previous year.

"At a time of great global change – economically, socially and environmentally – we continue to focus on how we ‘intelligently transform’ ourselves and enable our many customers around the world successfully to do the same," he said in a May 23 statement regarding Lenovo's financial results.

The layoffs are happening shortly after Lenovo concluded its Accelerate 2019 partner conference in Orlando in mid-May, where the company committed to being "channel-first" in its data center efforts.

The Lenovo spokesperson declined to break out how many employees were impacted by business unit. But a report by WRAL said that the layoffs impacted 20 percent, or roughly 200 employees, of the Data Center Group at the company's Research Triangle Park campus in Morrisville.

The Data Center Group has been the company's fastest-growing business, with revenue increasing 12.5 percent year-over-year to $6 billion in 2019.

The Lenovo spokesperson said that while the company is making job cuts, it's also hiring employees for new positions that will fuel "future growth." Lenovo's careers web page lists more than 200 job openings in the U.S. alone, with more than 1,000 positions total listed across the world.

"We continue to take actions that drive the long-term health of the business," the spokesperson added. "Unfortunately, this means making cuts in certain areas of the business while investing in others, adding new employees with the necessary skills to fuel our future growth. Lenovo will continue to make adjustments as needed as part of our ongoing management of the business."

Michael Goldstein, president and CEO of LAN Infotech, a Fort Lauderdale, Fla.-based solution provider that mainly works with Lenovo on the client computer side, said Lenovo's layoffs are a natural progression that many companies go through as dynamics within the organization change.

"You feel bad for how it happens and what goes on, but I think this is the natural progression of what we see happen over time," he said.