Intel to Cut 12,000 Jobs--3rd Update
April 19 2016 - 4:41PM
Dow Jones News
By Tess Stynes
Intel Corp. said it plans to reduce its global workforce by up
to 12,000 jobs, or 11%, as the semiconductor giant seeks to
transition away from being a company focused on computer chips.
"These actions drive long-term change to further establish Intel
as the leader for the smart, connected world," Chief Executive
Brian Krzanich said in an email to employees. The chip maker had a
global workforce of 107,300 employees at the end of 2015, according
to a regulatory filing.
Intel announced the job cuts and the pending transition of its
chief financial officer along with its first-quarter results, which
included a lackluster 7.2% increase in first-quarter revenue.
Shares of the Santa Clara, Calif., company recently fell 2.7% to
$30.75 in after-hours trading as Intel also lowered its revenue
growth forecast for 2016.
For decades, Intel has been the primary provider of chips for
personal computers. As PC sales have slowed, the chip maker has
focused more on providing the computing power for server systems
that act as the backbone for the growth in cloud-computing.
Intel said Tuesday that the job cuts are part of the company's
restructuring away from a computer-based company to one that powers
the cloud and billions of connected computing devices.
In the first quarter, revenue in Intel's client computing group
-- which includes chips for personal computers and mobile devices
-- rose 1.7% to $7.55 billion as volume decreased 15% and average
selling prices improved by 19%.
In the company's data center group, the area that includes chips
for servers, sales rose 8.6% to $4 billion on volume growth of 13%,
slightly offset by a 3% decline in average selling prices.
The company said the job cuts include the consolidation of
operations globally, along with layoffs and voluntary departures.
Intel plans to notify most of the affected employees over the next
60 days, with some actions carrying over into next year.
Intel is aiming to save $750 million this year, with annual
run-rate savings of $1.4 billion by mid-2017. The company plans to
post a second-quarter charge of $1.2 billion related to the
cost-cutting program.
Intel also said its chief financial officer, Stacy Smith, will
transition to a new role leading sales, manufacturing and
operations, once the company identifies a successor to Mr. Smith, a
28-year Intel veteran. The company has begun an executive search
that will include internal and external candidates.
Over all, for the first quarter, Intel reported a profit of
$2.05 billion, or 42 cents a share, up from $1.99 billion, or 41
cents a share, a year earlier. Excluding certain items, the company
reported per-share earnings of 54 cents. Analysts polled by Thomson
Reuters expected per-share profit of 48 cents.
Revenue increased to $13.7 billion from $12.78 billion. The
company expected $14 billion, plus or minus $500 million.
Intel reported its quarterly results under a new structure that
aimed to break out more details about three of its businesses,
including one that includes its recent acquisition of Altera
Corp.
Intel said its programmable solutions group, which includes the
recently acquired Altera, generated revenue of $359 million in the
latest period. The figure doesn't include $99 million of revenue as
the result of acquisition-related adjustments, the company said in
its news release.
The Internet of Things group, which includes chips for various
kinds of noncompeting applications, posted revenue growth of 22% to
$651 million.
For the second quarter, Intel projected revenue of $13.5
billion, plus or minus $500 million. Analysts polled by Thomson
Reuters expected revenue of $14.16 billion.
For 2016, the company lowered its revenue guidance to growth in
the mid-single digits, from its previous estimate for revenue
growth in the mid-to-high single digits.
Write to Tess Stynes at tess.stynes@wsj.com
(END) Dow Jones Newswires
April 19, 2016 17:26 ET (21:26 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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