Lenovo has reported a net loss of $714 million, its first loss in six years, and the company is blaming much of it on smartphones. Due to a combination of charges from its Motorola acquisition and a stockpile of $300 million worth of unsold phones, Lenovo has had a tough quarter. PC sales also dropped 17% compared to last year, just as they've dropped at other PC companies.

Since it is dealing with its "toughest market environment in recent years," Lenovo is laying off thousands of employees in order to cut costs.

The Motorola acquisition should ultimately help Lenovo. Already, Motorola is responsible for around half of Lenovo's mobile sales revenue.

Lenovo expects to turn around and report a profit in 1-2 quarters.