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INDUSTRY ROUNDUP: HTC Cuts 2,000 Jobs After Biggest Quarterly Loss

Aug. 13, 2015
Computer giant Lenovo also cutting thousands of jobs after quarterly net profit drop. ... Nestle first-half profits down thanks to strong Swiss franc, Indian noodle recall. ... Tech group FIS acquires rival SunGard in cash and stock deal.

TAIPEI — Taiwanese smartphone maker HTC said Thursday it would cut more than 2,000 jobs, slashing its workforce by 15%, after posting its biggest quarterly loss in company history.

The announcement came less than a week after the firm said it had swung to a deep loss of Tw$8.0 billion ($248.45 million) in the second quarter, from a net profit of $2.26 billion in the same period last year. That saw HTC’s closing share price sink to its lowest in more than a decade. On Thursday stocks fell further, closing down 7.82% at Tw$50.7 ($1.57).

Once the star of the intensely competitive smartphone sector, HTC has seen its fortunes collapse as Samsung, Apple and strong Chinese brands like Lenovo and Huawei have surged ahead.

The jobs cuts are part of a “business realignment” to spur growth, the firm said in a statement. It was aiming for “significant profitable growth with a leaner and more agile operating model. … This realignment will also involve a streamlining of operations to result in an expected reduction in operating expenditure of 35%; this includes an expected 15% in headcount.”

LENOVO: HONG KONG — Chinese computer giant Lenovo said Thursday it would cut more than 3,000 jobs as net profit for its first quarter fell by more than 50%.

The world’s biggest personal computer maker also saw revenues miss analysts’ forecasts in what chairman and CEO Yuanqing Yang described as the “toughest market environment in recent years”.

Net profit dropped 51% to $105 million for the first three months to June 30 — which the firm takes as its first quarter — compared to $214 million for the same period last year. Pre-tax profit for the first quarter also plunged by 80%. Revenue grew 3% to $10.7 billion, but fell short of Bloomberg analysts’ average estimates of $11.5 billion.

In a statement to the Hong Kong stock exchange, Lenovo said it would seek to slash costs by $1.35 billion annually and cut 3,200 staff from its non-manufacturing workforce — around 5% of its worldwide headcount. It would also restructure its mobile business.

NESTLE: ZURICH — Food giant Nestle on Thursday announced slightly lower first-half profits compared to last year, with the strong Swiss franc and the Maggi instant noodles recall in India undercutting better-than-expected sales.

The maker of Nespresso and KitKat reported profits of 4.1 billion Swiss francs ($4.20 billion) for the first six months of the year, 2.5% lower than during the same period in 2014.

“The first-half results were in line with our expectations, broad-based across categories and geographies, solid even in difficult circumstances,” Nestle’s CEO Paul Bulcke said in a statement. He sought to highlight the company’s burgeoning health and wellness strategy, in which Nestle has been heavily investing over the last several years. 

The Nestle Nutrition line saw 3.9% organic growth over the first half of the year, a figure that Bulcke said underscored the “relevance and strength” of the company’s pivot towards health products. Nestle’s first half revenues of 42.8 billion Swiss francs ($43.82 million) were also slightly lower than last year’s 42.9 billion ($43.93 million), due mainly to the soaring Swiss franc.  

FIS: SAN FRANCISCO — Financial software and tech group FIS announced Wednesday it was buying rival SunGard in a cash and stock deal worth $9.1 billion including debt.

“By bringing together two innovative companies with common business models, similar cultures, strong leadership and complementary solutions, we are enhancing our ability to empower our clients and deepen client relationships through an expanded full-service offering,” FIS president and CEO Gary Norcross said.

The combined company will have more than 55,000 employees and support “thousands of clients” in more than 100 countries, according to a statement.

Privately held SunGard has some 13,000 employees and annual revenue of $2.8 billion. FIS, previously known as Fidelity National Information Services, serves more than 14,000 institutions in over 130 countries, and employs around 42,000 people.

Copyright Agence France-Presse, 2015

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