By Josh Long

After facing what may have been “the toughest market environment in recent years,” Lenovo Group on Thursday announced plans to cut 3,200 jobs in its non-manufacturing workforce as part of a realignment that is expected to slash $1.35 billion in expenses on an annual basis.

The announced layoffs, which comprise 5 percent of Lenovo’s total headcount of 60,000 employees, coincided with the company’s acknowledgement that its global PC and tablet businesses regressed in the quarter that ended on June 30. The Hong Kong-based company also reported escalating competition and slowing growth in its smartphone business.

“Last quarter, we faced perhaps the toughest market environment in recent years, but we still achieved solid results,” Lenovo CEO Yuanqing Yang said.

Yang cited some positives in the PC, smartphone and enterprise businesses. He still cautioned, “But to build long-term, sustainable growth, we must take proactive and decisive actions in every part of the businesses.”

Quarterly revenues rose 3 percent over the year-ago period to US$10.7 billion, but Lenovo’s profit plunged 51 percent, to $105 million. Lenovo, which closed its $2.9 billion acquisition of Motorola Mobility last year, said Motorola’s profits were hurt by macroeconomic challenges.

In spite of the financial headwinds, Lenovo said its PC business has grown to control 20.6 percent of the global market. And outside China, Lenovo’s smartphone volume rose 68 percent.

The company said its realignment will include a restructuring of its Mobile Business Group, resulting in a more streamlined product portfolio. In the most recent quarter, Lenovo’s smartphone share of the global market fell half of one percentage point to 4.7 percent, making it the world’s fifth-largest smartphone supplier.