The 'State of Things' at Lenovo – Not well, especially for North Carolina

Updated Feb. 23, 2009 at 8:30 a.m.

The 'State of Things' at Lenovo – Not well, especially for North Carolina

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RESEARCH TRIANGLE PARK, N.C. — Frank Stasio, host of the WUNC-FM program "The State of Things," and Daniel Zola, the program’s producer, invited The Skinny to their Durham studio on Friday to talk about all things Lenovo.

And there’s a great deal to discuss. If any Triangle technology company is in more turmoil right now than bankrupt Nortel, it’s Lenovo. The state of things is not well.

CEO out, chairman demoted and in as CEO; 11 percent of work force laid off; challenges to its technology; shrinking market share and more.

The full 12-minute discussion can be heard at WUNC-FM’s Web site.

While we were talking, Lenovo Chief Executive Officer Yang Yuanqing was dedicating Lenovo’s new factory in Apodaca, Mexico. Rather than picking the U.S., Lenovo opted for the cheaper labor market south of the Rio Grande for a facility that will hire 1,000 people and build up to 5 million PCs a year.

Meanwhile, Lenovo continues to cut former IBMers, whom it acquired four years ago through the deal for IBM’s PC division, which was based in the Triangle. Yang and Lenovo officials keep saying that the company is committed to North Carolina, where it maintains a new, three-building headquarters campus. But the latest Lenovo cutbacks – 11 percent of its 25,000-person work force, including 250 in RTP – are hardly good news for Morrisville. Transferring some call-center jobs to North Carolina from Canada doesn’t offset what has become habitual with the company – dump the higher-paid IBMers whenever possible.

The Skinny reiterated to Stasio a point made before – Lenovo is focused on emerging markets as well as protecting its home turf in China. As Stasio said succinctly, the U.S. is not an emerging market.

Lenovo also took a hit on the technology front last week when the reliability of its security software based on facial recognition was questioned at a big hackers’ conference in Las Vegas.

Janet Ang, the executive who ran the global desktop business group for Lenovo, was the latest former IBMer to leave the company last week. She’s gone back to IBM, according to The Australian.

Deepak Advani quit Lenovo last week after losing his role as chief marketing officer in a management reshuffling on Feb. 5. As part of that shakeup, CEO William Amelio also left.

At least Lenovo isn’t bankrupt and selling pieces of itself like Nortel. Lenovo is reportedly back in the hunt for Positivo, the top PC-maker in Brazil.

However, the deal is likely to cost Lenovo more than $1 billion. And such an acquisition would create many challenges for Yang. Lenovo is still trying to assimilate four cultures from the IBM deal – what’s left of the IBMers, the IBM design team in Japan, the Dell executives brought in by Amelio and the Chinese who created Lenovo over the past two decades.

Throw in Brazilian managers and what will the result be?

Throw in the infrastructure of a major company in Brazil and what does that mean for Morrisville as a headquarters? Will Yang keep his home in the Triangle or be tempted to move to Brazil? Can Lenovo afford three major headquarters-like operations – in Beijing, Morrisville and Rio de Janerio?

If the Positivo deal goes through, the acquisition could mean a stronger future for Lenovo in terms of global market share. But does a bigger, stronger Lenovo mean good news for the Triangle as the company grows even more international and focused on other markets?

A year from now, it will be interesting to see what the state of all things Lenovo is – and what it all means for North Carolina.

Tags: China, Dell, IBM, Lenovo, Nortel, Brazil

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