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Lenovo to Cut Workers, Move Jobs to Cheap Labor Markets

No. 3 personal computer maker Lenovo said it will lay off 1,400 workers as it moves more jobs to emerging markets to bring costs in line with bigger rivals Hewlett-Packard and Dell.

Lenovo, which leapt onto the world stage in 2005 when it bought IBM's loss-making PC arm for $1.25 billion, said it would cut a net 650 jobs throughout the world and move another 750 positions to China, India, Brazil and Slovakia -- countries with relatively low labor costs that are close to its suppliers and manufacturing operations.

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China's biggest maker of personal computers said the plan would affect 1,400 workers including contractors, or roughly 5% of its workforce. It expects to take a pretax restructuring charge of about $50 million to $60 million, mostly in the first quarter, and sees savings of about $100 million in the 2007-08 fiscal year, which began on April 1, Lenovo said in a statement.

Lenovo currently has about 24,500 employees, including 1,700 in Raleigh, North Carolina, which is the worldwide executive headquarters of the Chinese company.

Company spokesman Ray Gorman said about 350 workers in Raleigh will lose their jobs. He declined to say how the job cuts would be broken down across the rest of the company's operations around the world.

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