Lenovo posts Q4 loss, fires its CEO

In announcing a fourth quarter loss of $96.7 million, China-based PC maker Lenovo today ousted former Dell exec Bill Amelio as CEO and handed the leadership reins back over over to company founder Liu Chuanzhi.

At the same time, Lenovo demoted its chairman, Yang Yuanqing, to the post of CEO.

Lenovo's quarterly loss was higher than expected, and the executive reshuffling also came as a stunner. The team of Amelio and Yuanqing had just been named "Businessmen of the Year" by Forbes Asia in December. But although Lenovo's sales have since been inching up, the company's PC shipments slipped by 5% in the fourth quarter, according to the Gartner Group.

While some critics have pointed to quality issues, Lenovo's recent troubles seem to spring largely from unfortunate timing.

After completing the acquisition of IBM's PC business in May 2005, Lenovo initially faced large challenges in integrating the two organizations and becoming a major international player. Even a year ago, Lenovo had completed the tasks needed for the buyout to be successful, which have including moving IBM's PC customer base to Lenovo and driving down company manufacturing costs, according to a report issued by analyst firm Technology Business Research (TBR) in March of 2008.

As evidence, Ezra Gotthell, a TBR analyst, cited year-to-year growth for Lenovo that exceeded 9% through 2007. The report also lauded Lenovo's step into the global consumer notebook PC marketplace at CES 2008, as well as its partnership with IBM to produce and sell lower-end PC servers.

Yet in early 2008, analysts were still predicting a continuing boom in international PC sales, especially on the mobile side.

By now, though, virtually all PC market analysts have revised their forecasts downward. While Lenovo may have been hit harder than some other manufacturers, global PC shipments fell 2% across the board during the fourth quarter, according to Gartner's numbers.

The competitive picture has changed, too, with up-and-comer Acer rising from seemingly nowhere to become a major rival.

But according to Shaun Rein, head of the China Market Research Group, surveys in China have shown that consumers there feel that Lenovo has neglected the Chinese market to take on an international focus, and that its computer designs and customer service have suffered as a result.

Outside of China, observers have cited some quality issues, too. For instance, on some Internet discussion boards, people have complained of problems using Lenovo's implementation of Intel's Switchable Graphics.