By Jason Subler
DAVOS, Switzerland, Jan 31 (Reuters) - Lenovo Group, the world's No.4 personal computer maker, plans to expand aggressively in emerging markets and diversify its range of products to boost sales, its chief executive said on Saturday.
Lenovo earlier this month forecast a loss for the fourth quarter as China's slowing economy hit sales, and said it would axe 2,500 jobs as part of a restructuring to cope with falling demand for computers.
Its shares have fallen over 69 percent in the past year.
'Those trends in the industry -- China, commercial, the movement to low price bands -- created what I call the perfect storm that we're sitting in now,' Chief Executive William Amelio told Reuters in an interview.
'We're working diligently to reposition ourselves such that as we come out of the economic hassle, we will be positioned stronger and more viable,' he said on the sidelines of the World Economic Forum in Davos.
Lenovo is working to diversify its business to counter slowing growth in the Chinese PC market, a shrinking commercial market, and not having enough relatively inexpensive models as part of its line-up as demand for such products rises, he said.
It will release a stream of new products in China and other markets, making sure it has enough models in different price ranges, as many users turn to less expensive PCs in the face of the economic slowdown, Amelio said.
The company, which competes with Hewlett-Packard, Dell Inc and Acer, would try to grow 'dramatically faster' outside China, including in emerging markets such as Brazil, Amelio said.
Despite the pressure to cut costs, its research and development budget will remain basically steady as a proportion of revenue. Lenovo is also on the lookout for acquisitions that could help it gain scale or new technologies, he added.
'What we've done is we've made sure that key projects that we believe have legs on them will stay in the budget,' he said.
While no further cost-cutting measures such as layoffs are currently planned, the company is keeping its options open, Amelio said.
'If things change, we will be prepared to do what is required to keep our business successful,' he said.
The Chinese government's 4 trillion yuan ($585 billion) fiscal stimulus package will hopefully help boost demand for PCs there, Amelio said.
Particularly of interest is a government programme for giving farmers 13 percent subsidies on the purchase of home appliances, including PCs, he said.
'We have our team all over it. We're excited about it. It's an opportunity -- we'll see how it picks up,' he said.
For full coverage, blogs and TV from Davos go to http://www.reuters.com/davos
(Reporting by Jason Subler; Editing by Sophie Hares) (Davos newsroom; +41 814 137 937; jason.subler@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
DAVOS, Switzerland, Jan 31 (Reuters) - Lenovo Group, the world's No.4 personal computer maker, plans to expand aggressively in emerging markets and diversify its range of products to boost sales, its chief executive said on Saturday.
Lenovo earlier this month forecast a loss for the fourth quarter as China's slowing economy hit sales, and said it would axe 2,500 jobs as part of a restructuring to cope with falling demand for computers.
Its shares have fallen over 69 percent in the past year.
'Those trends in the industry -- China, commercial, the movement to low price bands -- created what I call the perfect storm that we're sitting in now,' Chief Executive William Amelio told Reuters in an interview.
'We're working diligently to reposition ourselves such that as we come out of the economic hassle, we will be positioned stronger and more viable,' he said on the sidelines of the World Economic Forum in Davos.
Lenovo is working to diversify its business to counter slowing growth in the Chinese PC market, a shrinking commercial market, and not having enough relatively inexpensive models as part of its line-up as demand for such products rises, he said.
It will release a stream of new products in China and other markets, making sure it has enough models in different price ranges, as many users turn to less expensive PCs in the face of the economic slowdown, Amelio said.
The company, which competes with Hewlett-Packard, Dell Inc and Acer, would try to grow 'dramatically faster' outside China, including in emerging markets such as Brazil, Amelio said.
Despite the pressure to cut costs, its research and development budget will remain basically steady as a proportion of revenue. Lenovo is also on the lookout for acquisitions that could help it gain scale or new technologies, he added.
'What we've done is we've made sure that key projects that we believe have legs on them will stay in the budget,' he said.
While no further cost-cutting measures such as layoffs are currently planned, the company is keeping its options open, Amelio said.
'If things change, we will be prepared to do what is required to keep our business successful,' he said.
The Chinese government's 4 trillion yuan ($585 billion) fiscal stimulus package will hopefully help boost demand for PCs there, Amelio said.
Particularly of interest is a government programme for giving farmers 13 percent subsidies on the purchase of home appliances, including PCs, he said.
'We have our team all over it. We're excited about it. It's an opportunity -- we'll see how it picks up,' he said.
For full coverage, blogs and TV from Davos go to http://www.reuters.com/davos
(Reporting by Jason Subler; Editing by Sophie Hares) (Davos newsroom; +41 814 137 937; jason.subler@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.